Dear Shareholders,
 
 Recent years have been characterized by events ranging from dramatic to
 the unprecedented. There are new challenges and there are new
 opportunities.  What is different today is the speed and
 unpredictability of change, whether for the new challenges or the new
 opportunities. Today more than ever before if companies are to succeed
 they need to understand the changing context in which they are
 operating. This is the New Reality.
 
 2012 was tough and we started the year with caution because we line
 that the business environment was changing. During the year as the
 economy continued to slow down for various reasons we continued to grow
 but we also critically examined out business to seek the change we
 needed to initiate. In Order to be stronger and faster in the future
 and continue being the leader in the New Reality we have initiated
 actions to better align ourselves internally and externally. The short
 term ''quarter on quarter'' performance has been achieved even while we
 have been transforming.
 
 The year has been memorable for several other good reasons that put
 India more firmly on the global radar. In November two very high impact
 events took place. Nestle SA collaborated with FICCI to organise its
 International Summit on Creating Shared Value for the first time in an
 emerging economy and it was successfully organised in India. The second
 event that put Indian the global map was the inauguration of Nestl6
 SA''s first R&D Centre in India.  Both events are strategically
 important and reflect the increasing importance that India now
 commands. They also reinforce the foundation of our leadership in the
 new Reality and will strengthen our ability to continue providing ''Good
 Food, Good Life.
 
                                      Antonio Helio Waszyfc
 
                               Chairman & Managing Director