nestle pakistan limited2

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1. Background of Host Organization

1.1 Introduction of the Host Organization

Nestle with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestl

and is today the world's leading nutrition, health and Wellness Company. Sales for

2009 were CHF 108 bn. We employ around 280 000 people and have factories or

operations in almost every country in the world.

The Company's strategy is guided by several fundamental principles. Nestl's

existing products grow through innovation and renovation while maintaining a

balance in geographic activities and product lines. Long-term potential is never

sacrificed for short-term performance. The Company's priority is to bring the best and

most relevant products to people, wherever they are, whatever their needs,

throughout their lives.

Nestl Addresses will give you access to Nestl offices and websites around the

world. We demonstrate through our way of doing business in all the countries where

we are present a deep understanding of the local nature of nutrition, health and

wellness; we know that there is no one single product for everyone - our products

are tailored to suit tastes and habits wherever you are.

History of the Host Organization

1866-1905

In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were

unable to breastfeed. His first success was a premature infant who could not tolerate

his mother's milk or any of the usual substitutes. People quickly recognized the value

of the new product, after Nestl's new formula saved the child's life, and soon, FarineLacte Henri Nestl was being sold in much of Europe.

1905-1918

In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early

1900s, the company was operating factories in the United States, Britain, Germany

and Spain. World War I created new demand for dairy products in the form of

government contracts. By the end of the war, Nestl's production had more than

doubled.

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1918-1938

After the war Government contracts dried up and consumers switched back to fresh

milk. However, Nestl's management responded quickly, streamlining operations

and reducing debt. The 1920s saw Nestl's first expansion into new products, with

chocolate the Company's second most important activity

1938-1944

Nestl felt the effects of World War II immediately. Profits dropped from $20 million

in 1938 to $6 million in 1939. Factories were established in developing countries,

particularly Latin America. Ironically, the war helped with the introduction of the

Company's newest product, Nescafe, which was a staple drink of the US military.

Nestl's production and sales rose in the wartime economy.

1944-1975

The end of World War II was the beginning of a dynamic phase for Nestl. Growth

accelerated and companies were acquired. In 1947 came the merger with Maggi

seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963),

Libby's (1971) and Stouffer's (1973).

1975-1981

Nestl's growth in the developing world partially offset a slowdown in the Company's

traditional markets. Nestl made its second venture outside the food industry by

acquiring Alcon Laboratories Inc...

1981-1995

Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved

bottom line allowed the Company to launch a new round of acquisitions, the most

important being American food giant Carnation.

1996-2002

The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled

and world markets developed into more or less integrated trading areas. Since 1996

there have been acquisitions including San Pellegrino (1997), Spillers Pet foods(1998) and Ralston Purina (2002). There were two major acquisitions in North

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America, both in 2002: in July, Nestl merged its U.S. ice cream business into

Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America,

Inc.

2003

The year 2003 started well with the acquisition of Move pick Ice Cream,

enhancing Nestl's position as one of the world market leaders in this product

category. In 2006, Jenny Craig and Uncle Toby's were added to the Nestl portfolio

and 2007 saw Novartis Medical Nutrition, Gerber and Henniez join the Company.

NESTLE TODAY

Nestle is now the world's largest food company. It is present on all five continents,

has an annual turnover of 74.7 billion Swiss francs, runs 509 factories in 83 countries

and employs about 231,000 people the world over.

The Company owes its current status to the pioneering spirit inherited from its

founders which continues to inspire it, to its concern with quality and to its constant

search for new ways of satisfying man's nutritional needs.

Wherever possible, it sets up factories locally, employs personnel from the country

concerned and relies on indigenous raw materials. Its agricultural services provide

assistance to improve the quality and yield of the raw materials it uses. Much

attention is devoted to professional training and to the integration of the Company in

its economic and social environment.

1.2 Vision Statement

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The Nestle vision is to be the leading health, wellness, and Nutrition Company in the

world. Nestle Pakistan aim is to meet the various needs of the consumer every day

by marketing and selling food of a consistently high quality.

The confidence that consumers have in our brands is a result of our companys

many years of knowledge in marketing, research and development, as well as

continuity consumers relate to this and feel they can trust our products.

Meet the nutritional needs of consumers of all age groups from infancy to old age,

from nutrition to pleasure, through an innovative portfolio of branded food and

beverage products of the highest quality.

Our milk collection and Agri services will continue to play the primary role in

development of the dairy sector in rural Pakistan.

Mission Statement

To continuously exceed our customer expectation for quality products and

services

Our goal is to offer top quality brands and innovative packaging to meet the

individual needs of consumer all over the world, whenever, wherever and

however.

At Nestle our research makes it possible for everyone to enjoy better food for abetter life.

Good Food is the primary source of Good Health throughout life. We strive to

bring

Consumers foods that are safe, of high quality and provide optimal nutrition to

meet physiological needs. In addition to nutrition, health and wellness, Nestle

products bring consumers the vital ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages theyconsume, Nestle helps provide selections for all individual taste and lifestyle

preferences.

We know there is still much to discover about health, wellness and the role of

food in our lives, and we continue to search for answers to bring consumers

Good Food for Good Life.

1.3 Company Products

Milk Dairy and Chilled Dairy Products

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NESVITA (pro-bones dairy milk that used for produce calcium in the body)

CERELAC (Cerelac is used for every age of children to completing the vitamins)

NESCAFE (It is creamy milk that is used for preparing the unique and blend of tea)

MILO (Milo milk is used for children to be active it gives them the energy & vitamins)

NESTLE FRUIT YOGURT (It is a treat with real fruit chunks in sweet creamy yogurt)

NESTLE EVERY DAY (We love tea our day doesnt begin without it favourite cup)

NIDO (NIDO is the nutritional needs of your children at all stages of growth)

Nestle Raita (Raita its taste, guaranteed hygiene and simple convenience to dinner)

Beverage Products

Breakfast Cereals (It is used for children as breakfast nutrition)

Kit Kat (Chocolate is that is most indulgences which delights the senses of all ages.

POLO (Polo is right sweetness, fresh and minty and best for all-time favourite)

Nestle Fruita Vitals (They are naturally low in calories, and an excellent source of

Fibre and VitaminC.

4.3 Food Products

Maggi Noodle (feel the need of being more fun around their children it gives them a

chance to break out from their mum mould.

Nestle Pure Water Products

Nestle Mineral Water (Nestle water with mineral healthy for every stage of people)

1.4 Company Competitors

The core competitors of Nestle Pakistan Limited are as follows:

Haleeb food Company

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Unilever Food Company

Engro Food Company.

1.5 Company Banks

The company deals with the banks that are as follows:

RBS Bank of Pakistan

Habib Bank Limited of Pakistan

Muslim Commercial Bank of Pakistan

Allied Bank Limited of Pakistan etc.

The company transfer payments by using these banks.

2. Business Operations

The business operations of Nestle Pakistan Limited are as follows:

2.1 Organizational Structure

The Organizational Structure of Nestle Pakistan Limited is as:

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Figure: 2.1

2.2 Introduction of the Departments

The introduction of the Nestle departments is as follows:

Nutrition Department

This department is handled by country business manager and include controlled allthe nutrition products.

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Chairman

Chief Executive

Country Business

Manager Nurititon

Business ManagerBeverage

Head ofCommunication

Head of Financeand Control

Head of LegalAffairs

Head of Technical Head of SupplyChain

Head of CorporateAffairs

Head of HumanResource Head of Sales

Country Business

Manager

Country Business

Manager Water


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Water Department

This department is handled and controlled by country business manager. Thisdepartment includes all water products such as nestle pure water etc.

Beverage Department

This department is handled and controlled by business manager and include allbeverage products such as nestle cerelac, juices etc.

Communication Department

This department is handled and controlled by head of communication. It includesimproving the communication among management, staff and labor duringworking and no unethical behavior is showed from any type of person.

Finance and Control Department

This department is handled and controlled by head of finance and control. He madeall the financial statement and reports on this basis of quarterly, halfely andannually.

Legal Affairs Department

This department is handled and controlled by head of legal affaire. He solved all thelegal problems of the company according to the rules and laws of the country

during the working of the company.

Technical Department

The department is controlled by head of technical department. He handled all thetechnical affaires of the company during working. He provides technical skillsand material to the company.

Supply Chain Department

This department is controlled by head of supply chain. He handled all the supply

chain activities inside the country.

Corporate Department

This department is controlled by head of corporate affairs department. He deals allthe corporate affairs of the company as the company is working according to thecorporate governance of the country.

Department of Human Resources

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This department is controlled by head of human resources. He handled all thehuman resources actives of the company.

Sales Department

This department is controlled by head of sales. He handled all the sales activities ofcompany such as increasing and promotion of sales etc.

2.3 SWOT Analysis

STRENGTH

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Nestle is socially responsible company as it construct two primary school in 13

and 14 chak of Kabirwala, install water purification plant in Dinyapur and provide

quality products.

NPL enjoys strong brand image in the market as compare to competitors. Marketing strategies established by the company are innovative and financial,

marketing and sales strategies are formulated according to the customer

demands. An efficient Distribution network throughout the country is strength of

the company.

Signifies the quality image high standard and quality milk collection from rural

areas.

Loyalty from farmers due to insurance is also the major strength for the company. Employees are also loyal due to the decentralized culture of company.

People trust on products due to the proper health and safety measures.

Being a multinational company it has the capability to attract more customer than

the local companies.

The NPL has the ability to compete in a dynamic environment.

The NPL always adapts the new technology.

WEAKNESSES

The NPL made selective investment due to political and economical uncertainty

in the country.

The Maggi Noodles plant that is installed has a higher capacity than actual

demand of the Maggi product therefore the over head cost is higher due to less

production.

The NPL did not make credit sales to whole sellers and retailers. Obviously the

sales of NPL products are less as compared to its rivals as Haleeb and Liver

brothers.

Low Sales margin due highly quality products and value added products.

The employees of the company are not satisfied due to low salary package.

Due to low salary packages the other local companies takeover the Nestle

employees by offering the high salary packages and as well as incentives.

OPPORTUNITIES

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The NPL has expanded its products range as it recently launched Nestle Plain

yogurt, fruit yogurt and coffee etc.

If NPL adopt the credit policies then it increases its sales of their products in the

market. The NPL has the opportunity to expand or capture the market by adding its

products line as ice cream products.

The NPL can open separate stores to eliminate the retailers in the market.

The NPL can increase it sales of their products by providing the incentives to the

retailers.

THREATS

The NPL bear the price fluctuation in the rupee due to material imported

because due to rupee devaluation it paid more currency to imported country.

Due to political and economic uncertainty there is a great threat for NPL

because the major funds invested in the country come from outside the Pakistan.

Due to economic crisis in the world made causes to withdrawal of foreign

management and investment from the company that is big halt for the company.

Existing companies like Haleeb, Engro and Liver brothers are increasing theirproduct line that is a threat for the company in the coming years.

The Haleeb food company is giving more discounts to retailers as compared

to distributors so that retailers prefer Haleeb products for sales.

The NPL bears high distribution cost as compare to its local rivals as it

maintain and obeys the Nestle quality standards.

The local companies are competing on the basis of cost of production as it

provides the qualitative products to its consumers.

Conclusion

I conclude that Nestle is leader in the market and having good repute in the market.

2.4 Nestle Marketing Strategy

The NPL install new plant to introduce a fresh marketing strategy the aimed to

provide the more quality products because nestle concentrate more strictly on

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quality. The company introducing the projects to tailor diets to the health needs of

each individual.

The main hallmark of the company is the quality of the products which the company

offers.

Currently the company starts the rural development project with the cooperation of

Swiss Development Corporation or animal growth and rural development of the

farmers.

2.5 Nestle Competitive Strategy

Nestle is basically a food, nutrition, health and wellness company. Recently Nestle

made the global Business organization designed to strength and focus on their core

nutrition business.

The company believes that strength is the leadership in this market is the key factor

of their corporate strategy.

The company made research and development project to access the individual

preference of the nestle products and spend lot of the budget of this project.

Nestle compete with Haleeb, Unilever and Engro food companies on the basis of

quality products.

2.6 Business Process Analysis

The business process analysis of Nestle is as followed:

Milk Collection

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In Pakistan it collects milk from rural areas. A wide channel of milk collection is

spread all over country. The milk is collect in sub centers and after that all milk is

collect in main center.

Delivery of Milk

After collecting milk in main center it sends to factory by using transportation system

that is maintained by nestle. Nestle made contract with transport contractors and

paid to monthly payments as agreed per kilometers.

Receiving of Milk at Factory

Before dispatch of milk to factory first investigate the quality of milk in the lab. After

that the qualitative milk is received to the factory. All the record of milk receipts send

to milk collection and Agri services department head office Lahore.

Finance department activity

After receiving the milk receipts note from the shed wise the head office staff

maintains the record of milk receipt note on the statements and send this data in to

SAP software for proper recording.

Payments to Farmers and Transport Contractors

After maintaining the final record and approval from the head of department the head

office staff made online payment to the farmers accounts as shed wise and center

wise.

At the end of month the transport contractor send their monthly reports to the head

office for payment. The head office staffs prepare the shed wise reports and after

approval from the head of department send payment online their respective

accounts.

3. Learning as a Student Intern

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Personal learning is a moral and ethical obligation set by a person to move in a

mellow way to excel in present and future. During the internship I realized following

duties.

3.1 Duties

The duties that I performed during internship are as follows:

In Fix Cost Budgeting I registered the bank reconciliation statements with ledger

accounts, tally financial documents with demand draft, investigate milk price

control sheet, prepare approved and actual milk price sheet at regional level, tally

all the voucher with purchase general summary, prepare key performanceindicator sheet at regional level and calculate annually growth of milk.

In Loaning and Financing Section I prepare sheets of all documents such as

interest payment, installment payments, insurance premium payment and actual

payment to farmers.

Keeping, filing and recoding of agreement of financing and volume of supply of

milk.

In Fixed Assets Management System investigate the documents about repairsand maintenance of vehicles and maintain it in proper files.

Entering data of stock report, Good received Note, Assets transferred Note etc

Keeping filling of these reports.

Investigate the documents about Transportation Management System and

maintain it in proper files.

Keeping filling of these TMS reports

Investigate the documents about Raw Milk Procurement System and maintain it

in proper files.

Investigate the documents about Fresh Milk gain and loss System and maintain

it.

3.2 Accomplishments

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The accomplishments of the whole my six weeks internship is as follows:

Week No.1

The Accomplishments that I performed during internship are as follows:

3.2.1 Fixed cost and KPI Budgeting

My Internship is in the Technical Division. Technical Division consists of five

departments such as HRM, Engineering, MCAS, Admin and Procurement. But my

working area is MCAS (Milk collection Agri Services).

I learned about the Nestle milk collection setup as there are 41 regions and every

regions have consists of 60 centers and sub centers and have 9 Zones and everyZones consists of 4 to 5 or Six regions.

The Region is Controlled and Operate by RMCM (Regional milk collection manager)

and the Zonal Manager Controlled and operates the Regions. The Zonal manager

direct report to Head of Milk collection and Agri services department. There are 82

Accounts persons that handled 41 regions. It means that two person deals with one

regions.

Process Flow of KPI and Fix Cost Budgeting

Figure of KPI Budgeting

Fix Cost Budgeting

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PurchaseSummaries

AssignmentApplication

SAP Posting &Downloading

Fix Cost ReportingField

Comments


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The fixed cost is as follow:

Listing assignment code, region wise purchase Journal Summaries are preparation,

regions wise purchase journal summaries are combined on zonal level and forward it

to zonal managers for their review and comments.

The format of purchase journal summary is displayed in appendix 1.

For adjustment purpose means the payment that is transferred in inpreset holder

account should be adjusted and for Reimbursement purpose means the amount that

is transferred in inpreset holder account is less as compared to expenses then the

deficit amount should be transferred in that account. Every expense has unique code

e.g. Energy Electricity code is 50112030. The payments are made through banks

such as HBL, ABL, and UBL and received Payments by RBS.

There are 14 head of expenses and every expense has unique code. These

expenses heads are as follows:

1. Admin Expense

2. Chilling Expense

3. Depreciation Expense

4. Agri Services Expense

5. Fuels Expense

6. Insurance Expense

7. Maintenance & & Repair Expense

8. Office Supplies Expense

9. Operating Supplies Expense

10. Salaries expense

11. Energy Expense

The details of these expenses are displayed in appendix 1.

Sources of Milk Collections

1. Progressive Farmers (PF)

2. Village Milk Collections (VMC)

3. Dhodies

4. Mini Suppliers

5. Sub Centers Services (SCS)

Price Control Sheet

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In price control sheet some steps are followed:

1. The RMCM will take the prices or volume of his area as per competitive situation

and if some special rate required for some specific supplier then the name of

supplier is mentioned in the price control sheet according to registered source

type.

2. RMCM will send comparison of price sheet required vs. previous approved on

specified format to RMCM.

3. RMCM will review and forward MPCS (Milk price control sheet.

4. CMAS will compare the prices control sheet with price approved limit and

forward NMCM (National Milk collection Manager) for approval.

5. NMCM will consider the prices and take decision to approve or reject and

inform to CMACS.

6. After approval form NMCM CMAs will record the prices for costing and one

copy send to at main centre.

7. RMCM will get the revised prices and implemented.

8. Up to PKR 0.05 tolerance will be accepted form main centre if the milk rate

exceeds PKR 0.05 against approved rate then RMCM proceed for new approval.

9. At every Saturday centre will send their price control sheet to MCAS and

MCAS will tally the sheet with approved price sheet and calculate variance

Mr. Altaf Hussain told me about approved milk price sheet at regional level with

effect to week wise.

Approved Milk Price Sheet

1. The approved milk price sheet is generated by the finance and control

department and then approved by the head of MCAS.

2. After approving it sent to ZM and RMCM. To purchase milk according to

approved price.

3. After that data is collected from ZM and RMCM on the basis of approved price

and compare it with actual price.

4. Required fat of milk is 5.7 % and required total solid of milk is 14 %.

5. Approved price of milk is determined by the head of MCAS in every week i.e.

fat of milk is 5.7 % then the approved rate is 32.55.

6. The average milk price of the zone is calculated by cost over volume.

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7. Next week the price is approved and according to price RMCM purchase from

the farmer.

8. The variance is calculated by comparison of previous week and current week.

9. If the milk is purchased according to approved price then the variance is 0

otherwise, the variance is displayed if the price of milk is different by actual and

approved.

Key Performance Indicator (KPI)

In key performance indicator for costing or estimated target procurement of milk and

after actual milk collection is compared with milk target. If it increase target collection

then it displayed the growth. If not increase then display deficit of milk. The growth is

calculated on the basis of consolidate 12 months milk collection.

Investigation of Purchase General Summary

1. How payment is paid through bank, how payment is transferred to bank and how

much payment is drawn by impressed holder. Drawn payment is 50 thousand

because payment insurance is 50 thousand and how payment is paid though cheque

and how much amount is paid by cash.

2. Investigation of electricity bills payment with the help electricity bills that are

attached with the purchase general summary. Investigation of general sale tax for

claim purpose because GST is registered in Excise and Taxation Department.

Investigation of Income Tax for claim purpose because Nestle Paid Income Tax on

their Revenues annually.

3. Investigation of all cash memos that are used for general expense and tally with

purchase general summary.

4. Rectification of error from territory in charge if any entry is not matched with cash

memo or voucher.

5. After investigation a consolidate statement is prepared is approved by authorized

person such as controller of department and head of the department. This

preparation of documents by budgeting and controlled department.

Inpreset Holder Payment Statements

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The funds are transferred as an advance in imprest holder account through bank

such as ABL, UBL and HBL for utility bills.

The inpreset holder has an account in particular bank where he is belonged to.

The funds are transferred as advance for next week expenditure such as payments

of milk and petty cash expenses.

Financial Documents (FID)

Financial document is used to collect the recoveries of rejected milk and weigh

bridge and recoveries of milk advance payment.

Recoveries of rejected milk FID

It means some milk is rejected it reached in factory but the payment of this milk is

paid by the farmer Nestle Pakistan. This rejected milk should be sold to other party

such as military or other diaries because on the basis of already contracted. This

party issued DD with the name of Nestle bank such as RBS and mentioned DD No.,

Amount, Name of Nestle and Bank Name from the which the DD is issued and

provide this DD to the RMCM and RMCM send DD to Nestle head office and Nestle

head office recover amount from these bank and deposit into its account.

Note: Attached copper sheet that display payee name, account n. DD no. and bank

name issue DD and its address.

The demand draft as advance milk payment recovers FID

It means that the person who has received advance payment such as farmers or

Dhodies and provide milk to the Nestle but after some period of time they do not

provide milk to the Nestle then the RMCM collect payment from the farmer and go to

the bank and issued DD on the name of Nestle and send it to the head office.

For recovery of payments the RMCM collect payment and go to the bank and issued

demand draft on the name of the main bank of Nestle Pakistan Limited Lahore such

as RBS.

Bank Reconciliation Statement

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Bank reconciliation statement consists of balances as per our bank books and

balance as per bank statement.

The transaction of the bank statement is tally with company ledger accounts that

should be prepared by the RMCM and checked by the ZMCM and bank officer

prepared bank statement at the end of the month.

At the end of the month ledger accounts and bank statement transaction are

compared as how much money is transferred from head office imprest holder

account, opening balance, withdrawal and closing balance.

Both statements are reconciled at the end of the month and errors are corrected.

Bank reconciliation is prepared by the assistant account officer and approved by

RMCM and checked by MCAS for proper recording purpose.

On the basis of this statement the funds are transferred for the next week.

Note: Bank Statement is attached with ledger account that should be prepared on

daily basis.

.

Week No.2

3.2.2 Loaning/Financing to Farmer Section

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Objective of Loaning to Farmers Section

The main objective of loaning/financing to farmers section is to provide loan to

farmers free of interest if they provide milk to Nestle as required or above volume or

provide subsidy on interest. For this purpose and provide this loan facility to farmers

Nestle made agreement with ZTBL and KASB banks.

Agreement with ZTBL Bank

Nestle made agreement with ZTBL from October, 2007 to October, 2012 for five

years with amount of five billions and this agreement is for only Punjab Farmers

loaning.

Agreement with KASB Bank

Nestle made agreement with KASB Bank from 25 February, 2010 to 25 February,

2012 for three years with amount of 10 million and this agreement is for only Punjab

Farmers loaning.

Types of Agreements

Nestle made two agreements with farmers1) Agreement for financing of dairy cows

2) Agreement for commercial dairy development

Flow of Process of Loaning/Financing to Farmers Section

The flow of process of loaning/financing to farmers is on the basis of Agreement for

commercial dairy development and Agreement for financing of dairy cows.

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Figure of L and F

Requirements for farmers:

1) A farmer is a registered supplier of Nestle and provides certain supply of milk

to Nestle or average milk per day volume. E.g. above 30 liters.

2) He has eight adult animals.

3) He has three acers agricultural land.

4) He has an account in the ZTBL or KASB banks.

5) He did not defaulter of bank from previous years and payment of loan does

not exceed 90 days.

6) He takes loan of Rs.1000000 for five years.

7) Then he says to ZMCM for applying of loan for purchasing of new cows.

8) ZMCM personally survey the shed where he has already animals.

9) Dairy development executive personally survey of shed.

10)After survey of ZMCM and DDE the agreements is made between Nestle and

farmers on ishtam papers of Rs.50 on the basis of terms and conditions and

these terms and conditions are attached with paper and send to nestle Head

office for investigation and approval. Both are agree on these conditions. The

terms and conditions are as follows:

Terms and conditions between Nestle and farmers for agreement

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RMCM

Loaning andFinancing Section

AAO Bank

Farmers


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1) Total amount of loan

Under this agreement the farmer can avail form the bank maximum up to Rs.10

millions (subject to terms and conditions of NPL and bank and value of the collateral)

for purchase of local/cross breed cows.

2) Characteristics of Cows

The farmer has agreed to purchase cows as per NPL; standards from NPL

recommend/approved cow points. (NPL approved standards and list of NPL

approved cow points are annexed) and cow worth is 80000.

3) Insurance of Cows

The farmers shall pay to the bank the first year insurance premium of the cows

purchased at the time of disbursement if loan. He shall also keep these animals

insured for whole tenure of this agreement. In case the borrower fails to do so, the

bank shall be entitled to get the animals insured on its own and claim the amount of

the premium form the borrower along with mark up at the prevailing bank rate.

Nestle shall guide the borrower on the request in insurance related documentation

and filing of insurance claim, if any with in the specified time period prescribed by the

insurance company. Nestle however shall not be held responsible either by the bank

or the borrower for claim rejections/delays by the insurance.

4) Minimum volume of supply

At the time of agreement, dairy farmer shall supply minimum average daily 50 liters

milk NPL. Dairy farmer shall increase the daily milk volume supply to NPL as per

agreed development plan mentioned in annexure c.

5) Pricing of Milk

The milk rate applicable shall be the approved weekly milk rate of the relevant. In

addition to the approved milk rate dairy farmer shall be entitled to receive

incremental milk volume and loyalty incentives in case for eligibility with the

mentioned criteria described in commercial dairy development scheme.

6) Calculation & Payment procedure of incremental milk volume incentive

The incremental milk volume incentive shall be calculated and per as following:

Incremental milk volume incentive shall be paid on the daily milk volume supply

which shall be calculated on weekly purchased milk by NPL form the dairy farmers.

Incremental milk volume incentive payment shall starts form daily milk of 100 liters oronwards.

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Incremental milk volume incentive rates shall be applied in accordance with the

criteria mentioned in annexure A or any amendments issued by NPL form time to

time.

Incremental volume incentive shall be calculated (separately form milk price) & paid

by NPL on adjusted milk volume supplied by dairy farmer at announced milk quality

norms of NPL alone with regular weekly milk payment to the dairy farmers

designated by bank account.

7) Loyalty Incentive

Subject to following terms and conditions the farmer shall be eligible for loyalty

incentive

Loyalty incentive payment calculation starts form the average daily milk supply of 25

liters or above.

Loyalty incentive shall be calculated and paid PKR 1m (Rupee one only) per liters on

adjusted volume purchased by NPL during the period.

8) Haulage Charges

Under the agreement NPL shall pay Haulage Charges @ PKR 0.75 liter to dairy

farmer if dairy transports the mike on his own ate nearby NPL chiller announced milk

collection point.

If NPL is picking up or collecting the milk form the farm or any other dairy farmers

designate place as the case may be no haulage charges shall be paid to the dairy

farmer.

Haulage charges shall be paid on monthly basis is. The haulage charges of the last

months shall be paid with in k15 days of the following months.

9) Chilling charges

If farmer has its on chilling point the NPL paid Rs.50 per liter and Rs.50 per liter for

other charge beard by farmer such as fuel, electricity charges and repairs charge

etc.

10) Payment of Taxes and fees

The farmer shall have sole responsibility to pay all types of taxes duties and market

fee being imposed by market committee department.

11) Financial Assistance to farmers on bank loans

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However against the loan recommended by NPL to the bank for purchase of dairy

animals NPL shall reimburse the markup the farmer subject to terms and conditions

as per annexure D and events of default under this agreement. NPL reimburse the

interest on loan is Rs1.5 rupee per liter in flash period of time that is September to

April and Rs2 per liter in lean period that is May to August.

Letter for confirmation about CIB Report

After the investigation of agreement the loaning and financing section send letter for

confirmation about CIB report about the farmers profile towards banking transactions

for previous year to the Model branch Lahore.

The model branch sends this letter to the local branch for CIB report where the

farmer is residence.

If CIB report is cleared then NPL asked to ZMCM to provide all necessary

documents that are as follows:

Irrevocable undertaking attaching

Animal strength foam verified by RMCM a

Original Agri Pass book

Two passport size photograph

Clear copy of CNIC

In case of joint application paper is attached

Last there years Ausat Bay of the property offered as collateral

Khasra grdawari(evidence of collateral land in farmers possession)

Cop of Naqal Intiqal of the property

Does farmers Kacha/Pacca shed for keeps the animals

Did farmers ever defaulted with any bank in past

Repute of the farmer and his family is very good

CF agreement in case new commercial farmers is already sent

Local cows agreement is attached

Daily milk volume supply by CF(must be greater 30 liters per day)

No o f total adult animals(total in first box and milking in other box

CF code active and daily volume in the code

No of canals of collateral offered and last three years Ausat Bay

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The documents are verified by Ms. Najia batool if any document is missing then

inform to the regional RMCM and write in sheet that cod is pending.

If documents are cleared then write in sheet code is active and checked by Mr.

Kashif Sulman.

Local Dairy Cows Financing Appraisal Foam

After completion of documents Najia batool prepared performance appraisal foam on

the basis of the documents that should be provided by farmers. Description of the

farms is as follows:

Farmers identification, region name, DDE name, RMCM name and code of

farmers

Existing volume of supply milk details,

Collateral; details e.g. value of collateral 600000 of 70% of this value is

approve and 30% is maintain as cushion.

Following documents is missing

Remarks such as code is inactive, case is pending, code is active in week #

case is prepared in this date.

Letter for Recommendation

After Preparation of Performance appraisal foam if the cod is active then letter of

recommendation is prepared and send to Model branch of ZTBL or KASB bank. The

letter for recommendation is mentioned farmers name, fathers name, CINC #,

address of farmers, Region name, date for supplying milk, average volume of milk

and its cost, loan amount, no of purchased animals, expected quantity of milk and its

costs.

This foam approved by Dr Muhammad Ashraf (manager of milk agri services) and

Usman Khalid (controller of milk agri services) to provide loan for five years of 70%

of Rs.100000 that is 700000 of collateral security and 10% is contributed by farmer

of loan amount that is 100000. After that the Model branch approved loan and send

letter to provide loan. The local branch provide loan as prescribed on letter for

mentioned period.

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Before the disbursement of loan the farmers paid one year insurance premium as

advance or 1.9% for loan payment.

Repayment of loan and Interest Payments

Ms. Najia Batool told me about repayment of loan and interest payment of ZTBL and

KASB banks. The NPL provide subsidy on interest to farmers as Rs1.5 per liter

interest in flash period as farmers provide milk as required volume and remaining

interest paid by farmers. If farmers provide milk above volume then NPL paid the

whole interest of the farmers. The payment of interest is weekly. But first month is

grace period for payment of installment of loan. It means that the farmers will not

paid installment of loan in first month when he takes loan from the bank.

The process for payment is as follows:

When NPL receive milk from the farmers according to approved prince of the week

and proper record is prepared by AAO and approved by RMCM send to head office

MCAS department and receive RMPS section.

The loaning and financing sections receive list of milk collection and then interest

cost is calculated this is displayed in the appendix 3.

In this sheet all information are displayed such as CF code, branch name, region

name, farmer name, father name, date of disbursement of loan, total interest, week#,

total amount of milk supply, interest cost per liter, payment by NPL and payment by

farmer.

Interest cost per liter is calculated by total interest cost/total milk supply, if

interest is below Rs1.5 per liter than paid by nestle, if interest is above Rs1.5 than

above paid by farmer.

After preparation of interest cost sheet forward it to RMPS section, with

subject to PLZ deduct the interest amount, weekly installment payment and

insurance premium payment from the farmer milk payment.

The RMPS prepare consolidate statement that showed the total interest

payment, interest payment paid by NPL, interest payment paid by farmer, insurance

premium, installment amount and after these deduction actual payment is mentioned

and send this sheet to treasury department after approved by HOD of MCAS to

made payment of interest to bank.

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The treasury dept transfer the actual payment to the farmer account and paid

the interest, insurance premium and installment to the bank weekly.

Agreement for commercial dairy development

The agreement is develop on ishtam paper between NPL and farmers to provide

certain volume of milk average per day to NPL

In this agreement the farmer is agree to provide certain volume of milk to NPL on

daily

All the terms and conditions are same as prescribed in Agreement for financing of

dairy cows but insurance of animals and markup reimburse is not included. The

farmers is made registered supplier and is eligible for receiving all incentive from

NPL.

This agreement is send to Head office by RMCM for approval.

The loaning and financing section investigate the case and check the milk supply

from RMPS section as this farmer is already supply the required supply of milk of

not. After that the case is approved and signed by head of MCAS.

The farmer is eligible to receive the incentives from NPL.

The remaining time is spending on keeping the filling of agreements.

Joint white Revolution of Loan Scheme of NPL and ZTBL

1. Mode for determination of installment and payment

All loans would be back with in five years. First month is grace period and original

loan backed in 256 weeks if your weekly supply of milk is lower than installment

amount than the farmer would be considered as defaulter.

2. The NPL paid back your interest if interest did not exceed for following

formula:

September to April Rs1.50 or original interest which ever is less

May to August Rs.2.00 or original interest which ever is less

3. Matters for Insurance

The farmer would be insured your animals for loan paid, if farmer did not insured the

animal than he will be considered as defaulter.

4. Mode for payment for insurance premium

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The farmer paid insurance premium 1.9% of loan amount every year and paid 485

insurance examination charges of site for once. The farmer send premium draft to

the Adam Jee insurance company Ltd Lahore before receiving loan form bank. The

NPL deduct the weekly installment of insurance premium from the farmer milk

amount and send to bank or insurance company

5. Renew of Policy

Adam Jee insurance company sends copy of new policy to farmer bank and policy in

the name of farmer and bank. The farmers look after the animals according to

insurance rules certainty.

6. Mode for look after and Claim

Farmers would be curing the animal from the experienced DVM doctor if the animal

is ill.

If the animal death than tell the insurance company on mobile phone. After telling the

insurance company would send doctor for examination of the death animal and

represent report to the company.

The farmer would send claim foam for animal to the insurance company.

NPL provide guide if needed but did not responsible for claim of late or denied claim

by insurance company.

Mr. Kashif Sulman that is dealing with ZTBL & KASB banks transactions and

handled told me about the process of payment of principal installment, interest paid

by NPL Insurance premium by bank .

How many cases are pending in local branch, in Zonal branch, in DDE etc? They

made proper record of this information in excel sheets.

How many cases are approved by banks?

How many animals are deaths and how many are for claimed process and how

many cases are going out for claimed process.

How many farmers are continuing to milk business with NPL?

How many farmers made problem in b business of milk?

He told me about KIBOR (Karachi interest business operation ratio) determine by

SBP in every daily basis that is normally 12%.

When KASB or ZTBL bank provide loan to farmer than current KIBOR rate is

charged and its margin by 3% also because the bank also borrow from SBP. The

bank provide loan to farmer on normally 15%.

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Farms of NPL

NPL have two harms that are as follows:

Sarsabz farm

In Sarsabz farm consist of imported cows of 250. In these farms NPL educate the

farmers about care of animals such protect from heat of sunlight, feeding of animals,

medicine of animals, growth of milk and adoption of innovative mode of milk growth.

That is non profit farm. It is only for provision of knowledge about animals care and

growth of milk.

For care of animals, feeding, medicine, water, expenditures, profit and loss is

controlled by Ali Imran.

Sukheki Farm

Sukheki farm is joint venture of NPL and Babar Ali Foundation. In Sukheki farm

consist of 100 local cows and same procedure as mentioned above.

Benefits by NPL by these Farms

NPL is market leader in the world as milk production. There is no direct benefit byNPL from these farms but gain indirect benefit from farmers by providing milk in

future and care animals and make growth of milk in future.

Week No.3

3.2.3 Fixed Assets Management

Objective of Fixed Assets management

The main objective of Fixed Assets Management is to manage the Assets and cost

allocation of these assets.

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Annual Capex Budget & Implementation of projects.

Analysis of variance of Budget as annually and monthly

M&R Budget Implementation and control.

Fixed Assets Management (19,100 Assets worth 1.6 Billion PKR).

Material Supplies central control. (Operating supply, Glassware, Chemical,

Stationary)

Energy Conversation Management.

Functions of Fixed Assets Management

The functions of fix assets management are aw follows:

To control the assets as through standard operating procedure management

Purchase of new assets, Sale of scrap assets, addition of assets, deletion of assets,

issuance of assets, and transfer of assets from one center to another center or from

one region to another region.

Repairs & maintenance of fixed assets

Material supply such as office equipment, chemical supply, stationary supply,

operating supply etc and to maintain the proper record of fixed assets and supplies

and vendor payments etc.

Made payments to vendors or suppliers from where the material is purchased on

monthly basis.

To maintain the flow of information from regions to head office

Fixed Assets

The fixed assets are those that value is above 5000 but equipments such chair, table

as its value is less than 5000 is considered as fixed assets.

Fixed assets in NPL are Chiller, Generators, Electric Gerber machine, Electric milk

loading pump, milk loading pump engine, water pump gold maticG-1, Weight bride

capacity 20 ton, solar water heater model JA-1, Chain pullly one tone with triport and

wire, Digital earth tester model 4103-H type, generator diesel 12 KVA, 24 KVA 3

phase, Stabilizers and motorcycle.

Quantity of Fixed Assets

Name of Assets Qty

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Total Assets 19100

Budget of Assets 1.72 Billions

Chillers and its capacity 2200(2520)

Generators 2205

Road Weighing 37

Tankers 562

PHE 31

Main Store SPK

Sub Stores 05

Memorandum

The assets that value is less than 5000 are called memorandum.

Process Flow of Milk Collection Engineering

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HMCAS


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Figure of MCE

Fixed Assets Budget Preparation

Budget is estimated and prepared as annually

MCE planned to consumed this budget

After the budget preparation the Controller of the engineering department prepare

the purchase request for purchase of new Assets and M&R supplies or material

This request is send to HMCAS for approval

After that this request sends to procurement department to review to which vendors

material is purchased

Procurement department select vendors

Budgeting of Fixed Assets

All expenditures for Purchase of fixed assets and repairs and maintenance such as

Chiller, Generators, Electric Gerber machine, Electric milk loading pump, milk

loading pump engine, water pump gold maticG-1, Weight bride capacity 20 ton, solar

water heater model JA-1, , Digital earth tester model 4103-H type, generator diesel

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MCE

MS EXECUTIVE FME

AAO AAO FMS FMS


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12 KVA, 24 KVA 3 phase, Stabilizers, ,motor car and motorcycle etc are advance

budgeted annually basis as head wise and maintain its records as region wise and

send it to their respective regions as controlled cost as expected budget for the year.

Purchase of material

The regions purchase the R&M material from the approved vendors by NPL and

vendors send their invoices as monthly basis to engineering departments in head

office.

Allocation of cost

The engineering department can allocate the total monthly cost of R&M and

purchased of new fixed assets as their respective heads on the basis of invoices

send by vendors.

Payment of Vendors

The vendors payments are transferred in their respective accounts on monthly

basis.

Recoding of cost

The engineering department maintains the total cost per month of R&M and new

purchased of fixed asset and its quantity as previous and additions in this year.

Variance of budgeted cost

At the end of year cost of 12 month are calculated and compare with expected

Budgeted cost and variance is also calculated. E.g. budget is 100% and consumed

80% than the variance is 20%.

Reporting of Data

After the assigning the annually budget to region the monthly report are prepared on

the basis of vendor invoices that send the vendors at the end of month attached with

vouchers.

The budget is allocated to regions as monthly basis as annually budget/12= Monthly

budget.

On the end of month the monthly budget is compared with actual expense and

variance is determined.

Reporting of Data as (WBS)

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The data is reported in excel sheets as following:

Capitalizing of assets in the system

Generate inventory code #

Tagging list assets as steel or plastic send field to tag the asset as protected misuse

Additions of Assets

Transfer of Assets note

Good received note

SAP transfer inventory and change location of assets

Deletion or Scrap of Assets

Evaluation the stock inventory

Now every report process is as follows:

New Electric Connection

Purchased Requisitions

After budget allocation for purchasing of new assets and Repair and maintenance of

assets the purchase request is prepared by Mr. Rashid sb and sends to

Procurement department to acquisitive these things and procurement department

select vendors as regions wise so that the center acquisitive the require material

easily.

But the assets that are purchased are sending to SKP store room.

Now engineering department delivered the Assets where it is required.

Vendors provisions of R&M Materials to the centers

The vendors provide the repair and maintenance material to centers and at the end

of month he goes filed maintenance engineer (FME) for verification of invoices.

After verification of invoices the vendor send the sheet format their total amount with

their invoices to engineering department Head office Lahore.

Vendors provisions of Assets to the Centers

The engineering department received request from centers as details wise through

telephone or email as purchased request to the head office.

The engineering department prepared purchase request orders on the basis of

purchase request and approved form HMCAS and send to through email or courier

to send these material to respective vendors centers of this region.

After sending the goods centers the vendor goes to Field Maintenance Engineer forverification of invoices.

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After verification of invoices he sends these invoices to the head office.

Preparation of purchase requisition by BSS

At end of month the BSS prepared purchase requisition on the basis of invoices that

are sends by the vendors and also verified it an approved from MCE.

Payment by Vendors

After that this sheet is send to budgeting and control section for payment of vendors.

The budgeting a control verifies and made purchase journal summary and send to

territory department for payment after approval of HMCAS.

The territory department verifies it and transferred payment to respective vendors

account.

Goods received Note

When asset is received by particular center then issue the good received note as

asset is received the is prepared by RBBS as details of Assets is mentions an

quantity of assets also mention and approved by RMCM and send to engineering

department head office.

The engineering department records it to its SAP system as where asset is located

and its quantity and put into files as evidence.

Assets Transfer Note

Some assets that are not utilized as full capacity or being as spare in one center but

the others center needed that assets then the assets are transferred from one center

to another or from one region to another region.

Then the RMCM inform the engineering department in head office for transfer of

asset from one center to another or one region to another.

RBBS prepared form to transfer the asset and send this form to engineering

department.

The engineering department records it into SAP system and also keeps it into file as

evidence. The transfer assets note is showed in appendix 5.

At the end of month the BSS of engineering department prepared stock report at the

end of month as region wise.

The head of stock report are stationary, chemical, glassware and operating supplies.

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The contents that are including in stock report are:

Opening balance, issued, available for use and closing balance.

New Electric Connection

The new connections are requiring in center where the chiller are processed for milk.

The cost for new connections is showed in appendix 5.

Week No.4

3.2.4 Transportations Management System

Transportation Management System Objective

The main objective of the Transportation management System is to insure the

smooth and timely transportation of fresh milk from sub centers to main centers and

main center to factory.

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Functions of Transportation Management System

The functions of Transportation Management System are aw follows:

New route generation of vehicles

Vehicle Registration with NPL

Adjustments of extra vehicle kilometers

Arrangement of vendors monthly wise payments

Invoices generation of fresh milk vehicles per kilometers

To maintain the flow of information from regions to head office

Process Flow of TMS System

Figure of TMS

Vendors Payments

The payment to vendors against transportation is paid as per kilometer that is

displayed in appendix 7.

Vehicle Wise Bill for Fresh Milk Transportation

After that the data is entered in SAP as vehicle wise bill fresh milk transportation for

every transporter as center wise by AAO and bill for fresh milk transportation is

prepared AAO and soft copy is send to TMS department every month 29.The

description of this bill is displayed in appendix 6.

38

ZMCM

CMCAS

HMCAS

GTM

HOP HOSC Finance andControl


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The soft copy of these bills sends to TMS department head office. The TMS

department updates the bills in the system and compared with vouchers that are

sending by AAO.

The TMS department Staff calculate the per kilometers cost of milk tanker on the

basis of bills send by AAO.

After that the bills are prepared and soft copy is send to transporter and for payment

bills sends to account payable department.

The account payables department made verification of these bills and send to

treasury department for payment.

The treasury department transfer online payment to the respective account of the

transporter as center wise.

Petrol Pumps Invoice Summary

The petrol, mobil oils and diesel is required for milk collection and agri services

vehicles, generators, filters and loading pumps.

For this purpose the NPL made contract or agreement as centers wise to the petrol

pumps vendors to provide petrol to the NPL vehicles as daily base rate.

The vendors deliver petrol or diesel to NPL vehicles when vendors approved

vouchers is issue by AAO with signature and NPL stamp.

At the end of month the vendors prepare vehicle sale ledger and send this send it to

as hard copy with attached vouchers to AAO.

The AAO prepare the petrol pumps summary and approved to line manager and

sends to TMS department head office Lahore.

The TMS department checked the vouchers of petrol as it is proper signed AAO with

NPL stamp. If not then TMS staff communicates the reason to AAO.

After checking the petrol voucher check petrol pumps summary as date, center

name, cost center, vendor #, signature by AAO and Line manager and check total

and subtotal and format is showed in appendix 7.

New/Revised Route Toll Tax

The NPL paid Tool Tax of milk collection vehicles to transporter as monthly basis.

Some time the rates of toll tax expense are increase or new route is defined then

transporter made request to AAO or RMCM for revised or new toll tax rate.

The AAO or RMCM prepare revised or new tool tax rate and send to GTM for

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verification and approved to SCM.

After verification and approved it the AAO send to TMS department in head office for

recording and updating into SAP software.

The TMS department staff enters new/revised route toll tax in the SAP.

The format is showed in appendix 8.

Problem Sheet Vehicle Wise Bill

Some time some errors are occurred in the vehicle wise bill for fresh milk

transportation such as dispatch not missing, Extra Km but reason is not mentioned,

sum of Km not mentioned, Gain or loss sheet not mentioned, photocopy of dispatch

attached but receiving not is missing, sheet no not telly, dates not telly with

supporting etc that errors are recoded in problem sheet.

The format of problem sheet is as

Sr#_____ Period No______ Date__________ Sheet #_________ Vehicle No______

Centername____________TransporterName__________ Problem______________

Requests for Opening New Vendors

The petrol and diesel is required for milk collection and Agri services vehicles. When

already vendor is far to the milk collection or vendor did not continuous business with

NPL due to pay the amount of oil in 15 days but the NPL made payment to vendors

then RMCM made request to GTM to opening new vendors. The GTM after

verification sends request to TMS department in head office to opening new vendor.

The TMS made request to head of procurement department to select new vendors

with proper reason with approval of head of MCAS department.

The head of procurement select the vendor and approved and give response to TMS

department.

The TMS department updates new vendor information in its system and gives

response to RMCM about opening new vendors through email.

Now the new vendors deliver oils the NPL vehicles.

Vehicle Taker Registration

The takers of the transport are registered with the name of NPL because the NPL is

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the owner of takers. When tankers are purchased by NPL then RMCM send request

to TMS to register the particular taker. The TMS staff registered the tanker with

assigning the tanker code, tanker location, tanker capacity and transporter name

which vehicle tanker is attached.

Week No.5

3.2.5 Raw Milk Procurement System

Raw Milk Procurement System objective

The main objective of the Raw Milk Procurement System is to insure the smooth and

timely raw milk received at factory.

Functions of Raw Milk Procurement System

The functions of Raw Milk Procurement System are aw follows:Weekly Payments to suppliers till Wednesday

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Weekly Payments of milk advance as per requirement

Weekly OSS deduction and payments

Weekly Vanda deductions and payments

Weekly Can/G.Machines/M.Measures deduction

Weekly LF/CD volume incentives

Weekly Registration of new milk suppliers/Vanda/OSS vendors

Weekly Stop/release of milk payments in case of emergency

Weekly Reporting at shed level relating to fresh milk payments

Monthly Payments of chilling charges

Monthly VA haulage and room rent payments

Monthly target incentive payment to CA/MCS/RMCM/ZMCM

All types of recoveries through milk payments and DD

Process Flow of Raw Milk Procurement System

42

Dhodies, PF, CD,VA, CA

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Figure of MPS

Milk Supplier Registration Foam

The MCS goes to milk suppliers as large farmers, CDF, VMC, VA, DO and PF to

provide milk to NPL. He tries to agree the suppliers with NPL.

When he agrees then MCS fill up the milk registration foam from the supplier.

The format of Milk Registration foam is showed in appendix 9.

The MCS take copy of ID card and original check and attached it with the registration

form.

After fill the form and document attached it send to AAO. AAO call the respective

branch for verification of account and profile of milk supplier and after that send it to

the RMPS department Lahore for recoding purpose.

The RMPS department investigates the registration form and approved it by the line

manager and records it to the system and start deduction plan as weekly basis.

Agreement of Advance against Milk Supply

The NPL provides advance as loan to the registered milk suppliers as they

purchased milk as better and made upper standard of milk. Loan is provided for

motor cycle, Aluminum cane and milk advance.

The NPL have certain terms and conditions against advance milk supply payment

43

Data entry at Main

Center

AAO at Regional

Office

RMPS forRecording

TreasuryDepartment


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The supplier will provide milk to NPL according to its manage system and quality

control until completed backed loan amount to NPL

The NPL deny to accepted milk if it is not according to quality standard

The loan is backed by supplier as weekly as predetermined installments by RMPS

The supplier will not provide milk to another company until approved in writing by

NPL

The payment for milk to the supplier is made by means of bank. The payment is

given against providing milk delivery vouchers to NPL

The supplier will not any affect on weekly milk price

The deduction of loan is according to NPL principles

The NPL finished the agreement but supplier paid the remaining balance of loan

amount to the NPL

If supplier died then its legal heirs will be responsible for payment of advance for milk

The NPL will not receive any interest on loan amount

If any quarrel between NPL and Supplier then legal action will be under taken by

NPL at Lahore.

Format of Agreement of Advance against Milk Supply is showed in appendix 10.

Milk advance Top Summary

The milk advance payment is made to the supplier in installment by the NPL is

mentioned as reporting foam is displayed in appendix 11.

OSS (One Stop Shop) Deduction Top Summary

This agreement is made between farmers and vendors for delivering of medicine for

dairy animals

The vendor gives form to the farmers and farmers filled up and sends to the RMCM

and AAO prepared OSS deduction top summary and send it to the RMPS

department Lahore.

RMPS made the deductions from the respective farmers milk payment on the basis

of information send by the AAO.

Vanda Vendors shop Deductions and Payment

The NPL provides Vanda to the farmers as weekly through vendors and made

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payment to the vendors as weekly.

When farmers go to the vendors the vendor take an undertaking form and signed to

the farmers and after that deliver Vanda to the farmers.

The vendor sends vouchers to the AAO and AAO prepared Vanda vendors shop and

send it to the RMPS in Lahore for deductions purpose.

The RMPS deduct payment of Vanda from the weekly farmers milk supply amount

and prepared region wise total amount of Vanda as Vanda shop and deductions and

approved it to the HMCAS.

After that it sends it to the territory department for payment

The territory department transferred this amount as region wise or center wise to the

vendors account.

Format

Vendor Code ________Center Name_______________Vendor Name___________

Closing balance______________

VMC (Village Milk Collection) Haulage Payment

For milk collection purpose the NPL hire VMC that collect milk from the villages and

deliver it to the main center. The NPL paid haulage charges per liter as .50 and rent

of building where he collect milk as monthly Rs.300.The NPL paid haulage charges

to VMC as monthly basis.

The format of haulage payment is displayed in appendix 12.

Requests for Stop Payment

The NPL can stop payment to the farmers due to some certain reasons:

The payment can be stop due to the SCA left job

The AAO made request to RMPS did not transferred payment to the respective SCA

account due to left job by SCA.

The Payment can be stop due to wrong data entry in code 00T303 instead of

00T0308

The AAO made request to RMPS did not transferred payment due to wrong data

entry to the respective account of the farmer.

The payment can be stop due to bank account problem

The AAO made request to RMPS to transferred payment to another account of the

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farmers due to account operating problem. Or transferred payment to another

account no.

ZTBL Loan Installment Farmers Details new Plan

The RMPS deduct amount of installment of loan from the supplier weekly milk

payment and paid it to the ZTBL as weekly basis.

Format of ZTBL loan installment farmers is displayed in appendix 14.

Payment to Large Farmers and CDF weekly Increment volume inventive

The incentive is provided to farmers if they provided milk to the NPL above limit then

NPL paid one rupee per liter to the large farmers and CDF.

Format is displayed in appendix 15.

LF Chilling Charges

The NPL paid chilling charges as Rs.1per liter if the chiller is not owned by NPL and

paid Rs.50 per liter if chiller is owned by NPL.

Format

Sub area__________ CS code__________ CS Name__________ Volume________

Chiller owned (NPL, Farmer) ___________ Total amount____________

Financial Document (FID)

The NPL used financial document for adjustment, close of account purpose.

Some FIDs are as follows that is used by NPL

Unpaid FMP transfer to 1040190

The payment is received and transfer to NPL account due to account holder

deficiency in operating account.

Sarsabz Milk income transferred to Sarsabz farm cost

In this FID the income of farms is transferred to farm expenses on monthly basis

Payment of interest to farmers against loaning program

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In this FID the payment of interest against loan that is provided to commercial dairy

farmers and cows loaning arrangement is paid to ZTBL

Cost transfer to long term advance

DD received against extra rate payment

Provision of CD, CF inventive charges

In this FID the incentive of VMC, CDF and VMC rent and chilling charge are

transferred to the milk suppliers.

Adjustment of Provision of loyalty paid

The format of FID is displayed in appendix 17.

Week No.6

3.2.6 Fresh Milk Gain and Loss System

Fresh Milk Gain and Loss System Objective

The main objective of the Fresh Milk Gain and Loss System is to insure the smoothand timely fresh milk purchased and intake to factory.

Functions of Fresh Milk Gain and Loss System

The functions of Fresh Milk Gain and Loss System are aw follows:

Maintains the records of purchased fresh milk from the shed by using direct source

(VMC, Progressive farmers, Sub centers, Commercial dairy farmers, large farmers

etc)Maintains the records of purchased fresh milk from the shed by using indirect source

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(Dhodies, Mini Suppliers)

To achieve the target region and zone wise

Push the region and zone to increase the quantity of fresh milk

Dispatch fresh milk from centers to factory as daily basis

Maintain the records of left over milk to the center as region wise

Investigate the Talley sheet that is prepared at sub centers

Investigate the loss and gain summary that is prepared at sub centers

Investigate the dispatch note that is prepared at factory

Prepared fresh milk loss and gain sheet as vehicle wise

Prepared weekly consolidate fresh milk loss and gain sheet on the basis of regions

To give daily fresh milk loss and gain report to the higher management till 9:00 am

Process Flow of Fresh Milk Loss and Gain Diagram

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Dhodies, PF, CD,VA, CA

Milk is Dispatch atMain Center

Data entry at MainCenter Milk is Dispatch tothe Factory


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Figure of MLG

Milk Receipt Note (MRN)

The NPL issued the Milk receipt note to the milk suppliers such as CF, CDF, MSA,

PF, Dhodies and Mini suppliers against supply of fresh milk. The MRN have three

copies as white, yellow and green. The white copy is given to the milk supplier,

yellow copy is send to the head office and green copy is taken by sub centers for

recording purpose.

When fresh milk is received by VMC or MT then issued MRN to the milk supplier.

The format of MRN is showed in appendix 16.

Talley Sheet of fresh milk purchased register

After issuing the MRN to the milk suppliers the MT/QAA prepared Talley sheet on

the basis of MRN and calculate the total purchased of fresh milk received by MT.

There are two copies of Talley sheet as white that is taken by main center and yellow

copy that taken by sub center.

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AAO at RegionalOffice

Head Office

Milk Gain LossReports

RMPS for Paymentof Milk

TreasuryDepartment


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The MT at main center prepared a sheet that is gain and loss sheet and sends it to

the AAO at region.

The format of Talley sheet is displayed in appendix 17.

Sub center Loss/Gain and Quality Report

When fresh milk is dispatch from sub centers to the main centers he MT prepared

sub center loss/gain quality report.

The purpose of sub center loss/gain quality report is to display fat, volume, LR and

SNF of fresh milk and also calculate the difference as collect by MT, purchased by

MT and also mentioned quality of milk as time and temperature, Org, APT and For

+/-.

The MT show the record of dispatch of milk from sub center to main center and

calculate difference from sub centers to main centers and calculate the difference

from main center to factory intake of fresh milk.

After that the MT sends sheets to the AAO at region and AAO verify it and prepared

the loss and gain sheet and send softy copy as mail to the head office Lahore.

The format of sub center loss/gain quality report is showed in appendix 19.

Main Center Receiving/Vehicle Wise Loss/Gain Summary Report

When milk is dispatch from sub center to main center then QAA prepared the main

center receiving vehicle wise loss/gain summary report that display how much milk is

dispatch from sub center to main center and calculate the difference from sub center

to main center.

When fresh milk is dispatch from main center to factory the QAA display how much

milk is intake to the factory and also calculate the difference of fat from dispatch of

milk from main center to factory.

After that the QAA send this sheet to the AAO as he checked it and forward it to the

RMCM for verification and after verification the AAO send it to the head office

Lahore.

The format is showed in appendix 20.

Dispatch Note of Fresh Milk

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When fresh milk is dispatch form main center to factory intake then MT or QAA

prepared the dispatch note as milk for processing not for sale and also mentioned

the lab test results as temperature, APT, COB, Ph and Acidity etc and calculate the

variance of fat from main center to factory dispatch.

QAA at factory also verified lab test of fresh milk and check the quality of fresh milk.

MT send dispatch note to the AAO for verification and QAA received it at factory.

The format of Dispatch note of fresh milk is displayed in appendix 18.

VMC Fresh Milk Purchase Register

The VMC collect milk from different suppliers of milk then he maintains the records of

these suppliers as VMC fresh milk purchase register and verified it form MCS and

VMC send the original copy to the main center and duplicate copy is taken by VMC

as evidence.

The NPL transfer payment of VMC account as weekly basis so that he made

payment to mini milk supplier.

This sheet is verified by MCS and MCS send it to the AAO.

Sub Center Fresh Milk Purchased Register

When VMC deliver milk to the sub center then MSA prepared the sub center fresh

milk purchase register on the basis of VMC fresh milk purchase register and made

consolidate statement of VMC fresh milk purchase register as how many VMC

supply milk to the sub centers and mentioned suppliers name wise.

It is verified by MCS and sends it to the AAO. Original copy is send to the main

center and duplicate copy is taken by sub center as evidence.

Fresh Milk Gain and Loss Report

In head office he fresh milk gain and loss system staff prepared the daily gain and

loss report as how many milk is purchased in the shed, how much milk is left over at

main center, how much milk is loss due to accident, how much milk rejected at main

center and at factory, how much milk is dispatch from main center to factory and how

much milk is intake to the factory on the basis of above documents that are sending

by AAO as region wise.

This report is send to the higher management as daily basis.

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On 23 July, 2010 I give the presentation of 6 weeks learning to the controller

manager of milk collection and Agri services department.

3.3 New knowledge Acquired

So I acquired the knowledge which will help in this field of my life. Some of the

traits are following:

I learned all the procedure and financial statements that are related to the

MCAS.

I learned the whole process of loaning/financing to farmers.

I learned the objectives, functions and whole process of Fixed Assets

Management.

I learned the objectives, functions and whole process of Transportation

Management System.

I leaned the objectives, functions and whole process of Raw Milk Procurement

System.

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I learned the objectives, functions and whole process of Fresh Milk gain and

loss System and how to interact with different kinds of people.

Increase motivation and confidence to done job on time (task identity).

How to make relations with others also make these relations stronger. Know about different types of software which are useful for lifetime.

How to work 9 hours consistently on a seat.

Little bit knowledge of different steps of import procedure.

3.4 Problems Encountered

This experience brings change in my life. Because on the job or off the job, different

problems encountered in this period which gave me great knowledge of how people

works in reality. What types of problems they face while they work on any type of the

organization or doing their own business.

During my internship Period, I have encountered some problems. One of the main

reasons is that in this internship, I enjoy the time period that I spend in head office

Lahore. Thats why I remember this experience in future because it is filled with so

many mistakes made by me. Some of the problems which I ever remember are

following:

I face how to work with the employees of a company.

How to behave with them during working.

Practical life in the organization is very difficult.

Managed myself is very difficult.

3.5 How Experience Impacts your Career

This six weeks internship in Nestle head office makes a broad impact on my future

career because I develop the management in my every work activity.

Now I believe that phrase Past is the history future is the mystery, but today is the

gift. This is a great phrase said by the Muslim scholar. I have to analyze in this

internship period that how people make things happened which are never to be

imagine before that.

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At this time, I have developed confidence and knowledge about Finance activities

performing in any organization. So I am more excited about this field because I have

clear about my professional goals now. The thing is this that how people work on

that department, I have established my behavior and attitude to work on the job like

that. This will helps me to lead on my career goals.

This is not a big experience in terms of time. But one thing I want to say that it will

get change in my life. Because for the first time, I have to see that how people work

for live in the world. I had made so many mistakes and these mistakes help me to

get more experience in short span of time. Because people bring name to their

mistakes called EXPERIENCE. The experience which I have got from internship

period will cause positive impact on my career. Today; I know that Doing work in

reality is something more than just reading in books.

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4 . Conclusion

I leaned hallmark knowledge during my internship. The NPL is a multinational

company in Pakistan and each aspect of working with standard operating

system. Every department and every section is equipped with SOP. SOP defines

the working conditions and responsibilities of the employees as who is

responsible for that working.

As a result the employees are very cooperative with each other and loyal with the

company.

5. Recommendations

There are some recommendations that are as follows:

Employees should be trained according to the changing standard Operating System

of the organization.

The NPL shoul d conduct research f ormt i me to ti me to observe the empl oyees

.worki ng condi ti on and thei r way of worki ng

The NPL should concentrate the compensation reward and incentives in order to

keep loyal with the company.

The NPL should involve the employees in decision making to become more

differentiated.

6. Suggestions

My suggestions about NPL are as follows:

As a multinational company it provides corporate social responsibility to the people

of the Pakistan to make them loyal with the company.

The NPL provides the more margins to the retailers so that they can sale more

products of NPL as compared to rivals products.

The NPL conduct research from time to time to observe the demand of their products

from consumer mind. To observe the loyalty with the company about employees

each month fill up performance appraisal foam.

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7. REFERENCES

I have collected all the data from the following sources,

History of NPL, Mission Statement and Business Process analysis available

online at www.nestle.com viewed on 30 June, 2010.

Basic introduction of MCAS Department; Personal communication: Discussion

with Mr. Naeem Shekish on 14 June, 2010

Key performance indicator; Personal communication: Discussion with Mr.

Altaf Hussain on 17 June, 2010

Farmers Loaning and Financing; Personal communication: Discussion with

Malik Abbas Sb Head of Loaning & Financing Dept on 22 June, 2010

Fixed Assets Management; Personal communication: Discussion with Mr.

Raheel and Rashid Sb on 30 June, 2010

Transportation Management System; Personal communication: Discussion

with Sheraiz Gilliani and Waqar Rana on 5 July