nfl case study
TRANSCRIPT
Presented by:
Abrar HasanChief Executive
March 2, 2007
National Foods – A Success Story‘A Pakistan’s Case Study’
Fact Sheet
37 years of innovation Rs. 3 billion in sales 300 product SKUs 6 manufacturing units (Karachi, Bin Qasim,
Lahore) Central Warehousing (Lahore, Gujranwala,
Multan, Islamabad) Rs. 1 million to the economy everyday in
shape of taxes 350 towns covered across Pakistan 1500 employees Annualized Growth Rate of 23% for the last
35 years
National Foods - Facts
30 countries around world 409 distributors
Our Footprint
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Period
Per
cen
tag
e
Return on Capital Employed
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Period
Ru
pee
s
Earnings Per Share
Sales
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
Rupees
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Years
NFL Sales History
Gross Export Sales
Gross Local Sales
Product Categories
Plain Spices Pickles
RecipesRonaq
Jams
Ketchups Desserts
Salts Basmati Rice
Curry Pastes Sauces
Snacks Vinegars
Our History
Philosophy
Founder’s Philosophy• National Foods must focus on customer’s needs and serve them with quality products at affordable prices at their doorsteps. • Our products must be pure and conform to international standards.• Our research must continuously produce new adventurous products scientifically tested, hygienically produced in safe and attractive packaging. • We must create environment in our offices and factories where talents are groomed and have opportunity to advance in their careers. • We must prove to be recognized as good corporate citizens, support good causes-charity and bear fair share of taxes.• Reserves must be built, new factories created, sound profits made and fair dividend paid to our stock holders through building a reliable brand.• National Foods Ltd. must get itself recognized as leader in Pakistan and abroad. • With the help of almighty God, the company can achieve its targets in years to come.
Purpose“National Foods must focus on
Customer’s needs and serve them
with Quality Products at
affordable prices at their doorsteps.”
Passion– We act with intense positive energy and
are not afraid of taking risks. We challenge ourselves continuously and have pride for what we do and are good at it.
Customer Focus– We see the world through the eyes of our
customers. We do everything possible that makes them happy.
People Centric– We put our people first. Treat them with
respect and actively contribute towards their development.
Teamwork– Our roles are defined, not our
responsibilities. We believe in going the extra mile to accomplish our goals. We coach and support each other ensuring everyone wins. We have a WE versus I mindset.
Leadership– We are a part of the solution…never the
problem. We act like owners and have a positive influence on others.
Ethics– We don’t run our business at the cost of
human or ethical values.
Excellence in Execution– We say…we do … we deliver. We talk
with our actions. We strive for nothing but the best. Execution is the key to winning!
Accountability– We see, we act. We take full responsibility
for our actions and results. We don’t blame others for our mistakes; we analyze them and correct them.
Core Values
Humble Beginnings
This is where it all began…
Dinar Chambers
Present Infrastructure
National Foods as it stands today…
S.I.T.E Port Qasim
Milestones
1970 1978 1982 1985 1986 1988 1989 1990
1993 1997 1998 1999 2002 2005 20062000
Plain Spices
Table Salt
Basic Recipes
IngredientsRecipes& Snacks
PicklesHealth Food
Iodized Salt
Vermicelli KetchupJams & JelliesChinese Range
Raj Masala
Custards& Rivaaj
Squeezy
Ronaq
Evolution
Moving towards House of Brands Strategy
Convenience
Purity Hygiene
Brand Promise
Brand Positioning
– Quality, Hygiene and Purity
Commodity to Value Addition
– Concept of packaged commodities under the National Brand- “The Big Idea”
Trade Resistance
– Biggest Competition
– Lesser Margins as against loose
Convincing consumers for convenience
– Price Gap
– Perceived Quality > Perceived Price
– Free From Impurities
– Commonly available, the distribution challenge
Challenges
1970-80
1980-90
1990-00
2000-07
• The Big Idea• Changing consumer mindset• Competing with the ‘loose’• The fight to survive
•The move towards value addition -’Salt & Recipes’• Public Limited company• International alliances
• UNICEF Alliance• Diversification of product range• ISO Certification• Separate SBU for Export- Raj Masala• Move to professionalism
• JCR VIS• Launch of Ronaq and Squeezy• Automation• Port Qasim
Decades of Performance
Success Through Management Excellence
Financial Planning Product Development Branding Marketing and Selling Operations
Management Excellence
PRODUCT DEVELOPMENT
OPERATIONAL INVESTMENTS
BRAND INVESTMENTS
FINANCIAL OBJECTIVES
FINANCIALS – The Focal Point
The whole business plan is designed around financial parameters:
– Sustainable Growth Model – A practical approach to achieving top-line growth and bottom-line results. It looks at how much growth an entity can generate by maintaining the same financial relationships as the year before.
– Growth Rate = Return on Equity (Base year) X Retention Ratio %
FINANCIALS – The Center Point
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%
Sustainable Growth Rate
Maintaining Financial Discipline Is The Key ..which is achieved through optimizing– Equity Growth
• Minimum target is 30% per annum– Cash flows
• Through sustainable growth model achieve self sufficiency through own cash generation from operations
– Bottom Line• Minimum EBIT KPI’s
….. and through minute analysis of – CBM / CAM (Contribution Before / After Marketing
Investment) for each “Division”; “Region”; “Product Category”; and even “SKU” & “Customer”
FINANCIALS – The Center Point
Balanced approach for all automation and expansion projects maintaining sustainable debt / equity ratio
Controlled utilization of available external financial resources for working capital requirements
Optimum return on investment (ROI) model Efficient financial planning
– Maximum utilization of export credits
– LIBOR based financing – with exchange risk hedging
– Online collection system Above average credit rating of A+ by JCR VIS
FINANCIALS – The Center Point
Better tax planning yet contributing over Rs.350 million / annum
to the government treasury
Cost controlling through “responsibility accounting” …via
….Proper accounting of cost at various “cost centers” and their
timely reporting
FINANCIALS – The Center Point
Product Development
R&D– State-of-the-art facilities (HPLC, FTIR)– All our products conform to US FDA,
CFIA, Canada, EU and AQIS standards– Formal Procedures
Global Sourcing and Alliances– Certified Vendor Program– UNICEF– Oriental Merchants– Cerebos Foods
Product Development
Manufacturer
Effective Supply Chain Management
Branding
• Moving gradually towards House of Brands since 2000
• National• Rivaaj• Ronaq • Raj • Squeezy
Branding
Marketing and Selling– Building the finest Selling and distribution network
• Retail coverage of more than 80,000 outlets• Coverage of 350 towns across Pakistan• Direct Reach up to 50 % of Pakistan
– Clear and focused marketing message• More focus on functional benefits and fitting the
brand into consumer’s lifestyle– Not afraid to experiment
• Rivaaj– Innovation of ideas
• First company to introduce packaged spices• Squeezy• Iodized Salt
Branding
Research Methods:– CLT’s (Central Location Testing) and HUTs (Home Usage Testing)– Culinary Experts and Consumers are on Product Development
Panel– Brand Health Trackers
• Brand awareness• Advertisement Awareness• Top of mind recall
– Consumer Panel• Category Maps• Market and segment penetration• Shares• Volume and tonnage consumption
– Pre & Post Launch Ad Testing• AdWiser (Certified Software of AC Nielsen)
– Post Launch Evaluation• Learn from Mistakes
Marketing Research
Brand building Activities– 360 degree
communication
– TV advertising
– Brand Activation
– In Store Promotions
– Merchandising Drive
Brand Building Activities
Operations
HACCP Certified
ISO 9001 Certified
Microbial TestingCapability
Good Manufacturing
Practices
Operations: Quality Assurance
People Philosophy– Getting the right people– Competitive pay systems– Reward mechanism– Empowerment
Training and Development– Internal Programs– Cross functional exposure– Skill Development
Operations: Human Resources
Performance Management– Goals strategically aligned from
functional to individual level– Regular quarterly reviews of
business KPI’s– Celebrating success
Organizational Development– Benchmarking best practices– Restructuring and realignment of
business processes– Consultants to source know-how
Operations: Human Resources
Operations: IT Infrastructure
Dashboards, KPIs, Benchmark
XMLDATA WAREHOUSE
DataMining
BusinessIntelligence DSS
ERP …CRM SCM SFAOPERATIONAL
BUSINESSPERFORMANCE
& CONTROL
ANALYSIS
STORAGE
Operations: Information System
Adult Literacy Women’s Education Nutrition Awareness
Mission‘The primary objective of our social initiative is to improve the quality of life in Pakistan
by eradicating illiteracy throughout Pakistan’.
Corporate Social Responsibility
R&D– No of New Product Introductions– Product and Process Improvement
Index Procurement
– Out of Stock Index– Material Sourcing Quality Index
Supply Chain– Warehouse Utilization– Freight Monitoring Cost/Ton
Financials– EPS– ROE– GP by Category– Net Profit– Same Category Sales
Growth– Cash flow Generation– Equity Growth
Key Performance Indicators
Production– Tonnage per man-
hour– Wastages– Factory Operating
Expense / Ton– Equipment Efficiency– QA Operational
Compliance
Marketing & Sales– Zonal Profitability– Retail Audit– Brand Image Tracker– U&A Study
Key Performance Indicators
Designing of internal operational and financial polices
Regular external audits by A.F.Fergusons (PWC)
Independent compliance testing through outsourced internal audit function to Ford Rhodes Sidat Hyder (E&Y)
Quarterly reporting to audit committee
Corporate Governance
– Be Brand Oriented
• Think only in branded terms
– Only way to create value
– Invest in know how first then technology
– Technology would naturally become indigenous
– Do things right the first time, you don’t get A second chance
Key to Success
– Emerging Scenario
• Free Trade
• Global Village
• Emphasis on Lifestyle enhancing products
• Convenience the major key
– Opportunities
• South East Asia (SAARC)
– Major Growth Segment
» Pakistan
» India
• Africa and CAS
– Next wave of growth
Futurist Vision
‘To be a Rs. 50 billion food company by the year 2020 in the
convenience food segment by launching products and services in the
domestic and international markets that enhance lifestyle and create value
for our customers through management excellence
at all levels’.
Our Vision