Nestle India

1. During the year ended December 31, 2008, Impairment loss on fixed
 assets (Gross - Rs. 3,084 thousands, net of deferred taxes - Rs. 2,036
 thousands) relates to various items of plant and machinery that have
 been brought down to their recoverable values upon evaluation of future
 economic benefits from their use.
 
 2.  Segment reporting
 
 Based on the guiding principles given in Accounting Standard on
 Segment Reporting (AS-17), the Companys primary business segment is
 Food. The food business incorporates product groups viz. Milk Products
 and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
 and Confectionery, which mainly have similar risks and returns. As the
 Companys business activity falls within a single primary business
 segment the disclosure requirements of AS -17 in this regard are not
 applicable.
 
 3.  Related party disclosures under Accounting Standard 18
 
 Holding companies: Nestle S.A. and Maggi Enterprises Limited.
 
 Fellow subsidiaries are disclosed to comply with para 3 (a) of
 Accounting Standard -18 on Related party Disclosures albeit these do
 not control or exercise significant influence on Nestle India Limited:
 
 Belte Schweiz AG, Galderma India Pvt. Limited., Nestec S.A., Nestec
 York Limited, Nestle (Fiji) Limited, Nestle (China) Limited., Nestle
 (PNG) Limited, Nestle (South Africa) (Pty) Limited, Nestle (Thai)
 Limited, Nestle Australia Limited, Nestle Bangladesh Limited, Nestle
 Brazil Ltda, Nestle Central And West Africa Ltd, Nestle Deutschland AG,
 Nestle Egypt S.A.E., Nestle Foods Kenya Ltd, Nestle France S.A.S.,
 Nestle Ghana Ltd, Nestle Hong Kong Limited, Nestle Hungaria Kft.,
 Nestle Iran (Private Joint Stock Company), Nestle Japan Ltd, Nestle
 Korea Ltd, Nestle Kuban LLC, Nestle Lanka PLC, Nestle Manufacturing
 (Malaysia) Sdn. Bhd, Nestle Middle East FZE, Nestle Nederland B.V.,
 Nestle Nigeria PLC, Nestle Pakistan Ltd, Nestle Philippines, Inc.,
 Nestle Polska S.A., Nestle Product Technology Centre
 Lebensmittelforschung GMBH, Nestle Products Sdn..Bhd., Nestle R&D
 Centre (Pte) Limited, Nestle Romania S.R.L., Nestle Shanghai Limited.,
 Nestle Singapore (PTE) Limited, Nestle Suisse S.A., Nestle Taiwan
 Limited, Nestle Tianjin Limited., Nestle Trading (Fiji) Limited, Nestle
 Turkiye Gida Sanayi A.S., Nestle UK Ltd., Nestle USA Inc, Nestle
 Vietnam Limited., Nestle Waters Supply Est, Nestrade-Nestle World Trade
 Corporation, Osem Food Industries Limited, Osem UK Limited, PT Nestle
 Indonesia, Servcom SA, Societe des Produits Nestle S.A., Speciality
 Foods India Pvt Limited, Nestle Canada Inc, Nestle Bolivia S.A., Nestle
 Waters France S.A.S, Nestle R&D Center Shanghai Limited, Nestle
 Italiana S.p.A, Nestle Maroc S.A, Nestle Portugal S.A, Nestle Panama
 S.A, Nestle Senegal, Nestle Adriatic doo, Nestle New Zealand Limited,
 Nestle Shuangcheng Limited, Nestle Mexico S.A.de C.V, Nestles Products
 (Mauritius) Limited, Nestle Business Services S.A., Nestle Dongguan
 Limited, Nestle Equatorial Africa Region (EPZ) Limited.
 
 Whole time directors: Martial G Rolland, Chairman & Managing Director;
 Shobinder Duggal, Director - Finance & Control.
 
 4.  On the basis of confirmation obtained from suppliers who have
 registered themselves under the Micro Small Medium Enterprise
 Development Act, 2006 (MSMED Act, 2006) and based on the information
 available with the Company, the balance due to Micro & Small
 Enterprises as defined under the MSMED Act, 2006 is Rs.15,917 thousands
 (Previous year Rs. 10,495 thousands). Further, no interest during the
 year has been paid or payable under the terms of the MSMED Act, 2006.
 
 5.  Employee Plans
 
 a) The company makes contribution towards employees provident fund and
 employees state insurance plan scheme. Under the rules of these
 schemes, the Company is required to contribute a specified percentage
 of payroll costs. The Company during the year recognised Rs. 102,088
 thousands (Previous year Rs. 86,660 thousands) as expense towards
 contributions to these plans.
 
 Out of the total contribution, made for employees provident fund, Rs.
 50,793 thousands (Previous year Rs. 42,691 thousands) is made to the
 Nestle India Limited Employees Provident Fund Trust while the remainder
 contribution is made to provident fund plan operated by the Regional
 Provident Fund Commissioner.
 
 The total plan liabilities under the Nestle India Limited Employees
 Provident Fund Trust as at December 31, 2008 is Rs. 877,873 thousands
 (Previous year Rs. 780,797 thousands) as against total plan assets of
 Rs. 878,195 thousands (Previous year Rs. 785,831 thousands). The funds
 of the Trust have been invested under various securities as prescribed
 under the rules of the Trust.
 
 b) Gratuity scheme - This is a funded defined benefit plan for
 qualifying employees. The Company makes contributions to the Nestle
 India Limited Employees Gratuity Trust Fund. The scheme provides for a
 lumpsum payment to vested employees at retirement, death while in
 employment or on termination of employment. Vesting occurs upon
 completion of five years of service.
 
 c) Pension scheme - The Company operates a non funded pension defined
 benefit scheme for its employees that qualify under the scheme. The
 scheme is discretionary in nature.
 
 6. The Company participates in the Nestle Restricted Stock Unit (RSU)
 Plan of Nestle S.A., whereby select employees are granted non-
 tradeable Restricted Stock Units with the right to obtain Nestle S.A.
 shares or cash equivalent. Restricted Stock Units granted to employees
 vest, subject to certain conditions, after completion of three years.
 Upon vesting Nestle S.A. determines, whether shares, free of charge or
 cash equivalent to the value of shares, is to be transferred to the
 employee. The Company has to pay Nestle S.A. an amount equivalent to
 the value of Nestle S.A. shares on the date of vesting, delivered to
 the employee. Provisions are made based on estimates including Nestle
 S.A. share price over the vesting period.
 
 7. The Companys significant leasing arrangements are primarily in
 respect of operating leases for premises (office, residential,
 warehouses etc.) and vehicles. These leasing arrangements which are not
 non-cancellable are usually renewable on mutually agreeable terms. The
 aggregate lease rentals charged to the profit and loss account are Rs.
 271,157 thousands (Previous year Rs. 237,775 thousands).
 
 8.  During the calendar year 2007, the Company had sought approval of
 the Honble Delhi High Court under Sections 391 to 394 of the Companies
 Act, 1956 for a Scheme of Arrangement (Scheme) between the Company
 and its shareholders and creditors. The Scheme envisaged utilisation of
 following amounts for payment to the shareholders, subject to
 applicable taxes :
 
 i) An amount of Rs.432,363 thousands as lying in the Share Premium
 Account of the Company; and
 
 ii) An amount of Rs.430,857 thousands from the General Reserve Account
 of the Company, which was voluntarily transferred by the Company in
 excess of the prescribed 10% of the profits of the Company in
 accordance with the provisions of the Companies (Transfer of Profits to
 Reserves) Rules, 1975 during the financial years 1981 to 1996.  The
 equity shareholders supported the Scheme at a meeting held on May 3,
 2007 as per directions of the Honble Delhi High Court.  Subsequently,
 the Honourable Delhi High Court vide its Order dated September 30, 2008
 sanctioned the aforesaid Scheme and the Scheme became effective from
 October 31, 2008 after filing of the certified copy of the aforesaid
 Order with the Registrar of Companies, NCT of Delhi and Haryana.
 Thereafter as per the Scheme, after deducting applicable corporate
 dividend tax from the aggregate amount of Rs. 863,220 thousands
 credited to the Profit and Loss Account, a Special Dividend of Rs.7.50
 (Rupees seven and paise fifty only) per share calculated by dividing
 the net amount by the outstanding 96,415,716 equity shares of face
 value of Rs. 10/- each and rounding it off to the nearest half Rupee,
 was paid on November 26, 2008 to those shareholders whose name appeared
 in the Register of Members/ Beneficial Owners on November 17, 2008.
 
 9.  Previous year figures have been regrouped/reclassified wherever
 necessary, to make them comparable.