Nestlé India Limited (500790) Earnings Call Transcript & Summary

Dear members of Nestle Parivar, good morning, and welcome to the 61st Annual General Meeting of Nestle India Limited through video conferencing or other audiovisual facility. For the smooth conduct of the meeting, members will be in the mute mode. For members, who've preregistered to speak at the AGM, the audio and video will be opened when the Chairman requests them to speak. Please note further requirements, the proceedings of the Annual General Meeting will be recorded and available on the company website. Without any delay, I hand it over to Mr. Suresh Narayanan, Chairman and Managing Director of Nestle India Limited. Over to you, sir.

Thank you, Diksha. [Foreign Language] Dear members, I'm delighted and privileged to welcome you to the 61st Annual General Meeting conducted through video conferencing facility. Before I begin my address, I would like to, on behalf of myself, on behalf of Nestle India, and on behalf of all the shareholders who are present today, extend my heartfelt tribute to the Indian soldiers who were martyred on the Indo-Chinese border a few days ago. It is truly a tragedy. And in this hour of tragedy, we join our feelings, we join our respect to the departed souls and to their families. This is my fifth AGM as the Chairman and Managing Director of your company. But what is unique is that this is the first virtual AGM of the company. I missed the privilege and pleasure of meeting you in person. A bit of humor, light banter, some jokes, some [Foreign Language] are all the things that I missed today. And yet, in my view, the virtual AGM is a progressive step as it is what is the best possible in the times, and it allows members irrespective of where they are physically present anywhere in India or even abroad to participate in the Annual General Meeting. Lots of planning and efforts have gone behind the virtual AGM of the company today with the objective that your participation is smooth. Let me introduce the illustrious Board members on the screen. Starting from the top left of your screen, Ms. Rama Bijapurkar, Independent Non-Executive Director, Chairperson of the Stakeholders Relationship Committee and the member of the Corporate Social Responsibility Committee. She is participating from Mumbai. Dr. Swati Piramal, Independent Non-Executive Director, Chairperson of the Corporate Social Responsibility Committee. She is participating from Mumbai. Ms. Roopa Kudva, Independent Non-Executive Director, Member of the Audit Committee and Nomination and Remuneration Committee. She is participating from Mumbai. Dr. Rakesh Mohan, Independent Non-Executive Director and member of the Audit Committee and Nomination and Remuneration Committee. He is participating from the United States. This will be the last AGM of Dr. Mohan as he will retire on 30th June 2020 as per the retirement policy of the company or nonexecutive directors. On behalf of the members of the Board, I would wish to convey our sincere gratitude and thanks to Dr. Mohan for the valuable contributions to the Board of this company. It is currently past midnight in the U.S., and Dr. Mohan will be with us until 1:30 a.m. U.S. time. To my right, on your screen, Mr. Rajya Vardhan Kanoria, Independent Non-Executive Director; Chairman of the Audit Committee and the Nomination and Remuneration Committee and member of the Stakeholders Relationship Committee. He is participating from Delhi. Now to introduce those on the bottom of the screen, starting from the left of your screen, Mr. Martin Roemkens, Executive Director, Technical and member of the Risk Management Committee. He is participating from Gurugram. Mr. David Steven McDaniel, Executive Director, Finance and Control and CFO, member of the Stakeholders Relationship Committee and the Risk Management Committee. He is participating from Gurugram. Being his first meeting, I wish to briefly introduce Mr. McDaniel. He joined the Board effective from 1st March 2020. He's aged 51 years and is a chartered management accountant. He has over 30 years of rich and exhaustive experience in finance and control division and held senior management positions in various markets during his career with the Nestle Group. Before joining the company, he was the Chief Financial Officer of Nestle U.K. and Ireland since April 2016. Prior to this, Mr. McDaniel has had relevant exposure in Asia, having worked as Division Director, Finance and Control of Nestle Korea and Head of Finance and Control, Nestle Indochina. He's also worked in China in various capacities with the finance and control function and at Nestle S.A. in Vevey as the Head of Financial Services with the Global Business Services organization. Full details are contained in the notice of the AGM. The Board considers that his association and Nestle Group experience would be of immense benefit to the company and has recommended to the meeting his appointment as a Whole-time Director for a term of 5 years, starting 1st March 2020. I would also like to take the opportunity to thank Mr. Shobinder Duggal, who retired as Whole-time Director on 31st December 2019, for his unstinted, distinguished and dedicated contributions to the fortunes of your company during his 16-year tenure as Executive Director, Finance and Control and CFO. Finally, Mr. B. Murli, Senior Vice President, Legal and Company Secretary. The Company Secretary has advised me that a quorum as required under law is fulfilled, and I declare the meeting as validly convened. I also formally acknowledge the participation of the partners or authorized representative of the statutory auditors, cost auditors and secretarial auditors. The statutory registers required to be there during the AGM are available for inspection on the NSDL website under the tab AGM documents. The directors' report for company's performance during 2019 is already available with you in the annual report. Please allow me to start by sharing a few thoughts on the pandemic we are all living through. The COVID-19 crisis is having an extraordinary and far-reaching impact on our lives. Your company cares deeply for people, for the communities in which it operates and believes that it has an essential role to play during the COVID-19 crisis. Your company has committed itself to continue to give every possible support to the communities and to the authorities for fighting tirelessly and valiantly against the deadly virus. Your company is fully dedicated to this national cause and all employees are working tirelessly to ensure that much needed food and beverage products are available to the consumers and communities throughout the country. Your company's efforts to battle the pandemic encompasses the following areas: for the communities, for people, frontline sales force and also from the employees. Let me take up what we are doing for the communities. Your company has committed to initially a sum of INR 15 crores towards feeding programs and other support for less privileged sections of the society through participation with leading and credible NGOs engaged in this, along with distribution of essential groceries to the needy. It also supported out of the fund a contribution of INR 1 crore to Narayana Hrudayalaya Charitable Trust for purchase of much-needed ventilators for the Delhi NCR area. Additionally, it was an honor that some of the company brands were chosen for the meal kits offered to medical fraternity across selected cities in India who are at the forefront of fight against COVID-19. Your company has also contributed to Akshaya Patra's COVID-19 relief operations, which has helped serve 815,000 meals so far. It shall be providing more support as required. Contributions of company products have been made to local governments, including the police force in cities across the country. Your company has stood by its nearly 100,000 dairy farmers in these difficult times and has ensured that every drop of milk they gave was taken into the factory for processing. Similarly, it continues to work closely with its coffee farmers, spice growers and has extended support to numerous farmers in Karnataka for sourcing substantial quantity from them through the suppliers to ensure there is no distress. Through Nestle Healthy Kids program and for the beneficiaries as part of Project Jagriti, the company has used social media and phone calls in collaboration with the NGO partners to educate community members on the steps to be taken to prevent COVID-19. Local influencers have been engaged to ensure that the seriousness of the situation is conveyed adequately and that people are more receptive towards the precautionary measures that are to be taken to flatten the curve. Nestle India, through its Project Hilldaari and in collaboration with local stakeholders, reached out to waste professionals in the select towns and enable them to face the COVID-19 crisis by providing essentials, creating awareness and equipping them with safety gears. I will now come to what employees have done. Employees of Nestle in India stood together to support the fight against COVID in this hour of need and had an employee voluntary contribution program topped up with equivalent contribution from Nestle in India. The amount generated through this initiative was INR 2.5 crores through which Nestle in India has the Indian Red Cross Society to strengthen its efforts and for providing much needed relief in most impacted areas and to people suffering during -- due to the present conditions. I'll come to steps that we have taken for the frontline sales force. The frontline sales force who work for the distribution partners are the heroes who ensure Nestle India's standing in the marketplace. and the company rolled out a Nestle Suraksha program to cover each one of them who is not covered by employee state insurance with a COVID-19 insurance protection for a period of 3 months from 1st May to 31st July. Your company wants them to be safe and protect them should any unfortunate COVID-19-related event be fall them. For our people, the factory operators are the heroes who have heeded a national call to enable production of much-needed food and beverage products. The company has taken strict social distancing measures and other precautionary measures at all the manufacturing locations to ensure the health and well-being of the people. To honor this commitment, the company rolled out across all operating factories a Nestle SAMMAN program that will reward each operator for working during the stipulated period. Similarly, every commitment to summer internship has been honored. All the young management trainees have joined on time. Every new employee contract is respected and every employee has received their full salaries, bonuses and other benefits. As a responsible corporate citizen, Nestle India continues to offer help to the most vulnerable in society and is very thankful to the authorities at all levels of government for timely interventions, guidance and support. The people, especially the frontline workforce, have shown extraordinary commitment in keeping the operations running and meeting consumer needs under tough challenges. Please allow me to share a few examples of this. We have had people walking the extra mile. For example, Mustafa Hossain, who is a dedicated distributor salesman in Gangtok in the Northeast part of India, walked 14 kilometers each day for 3 days through the mountainous terrain to get the necessary permissions from the local authorities so that much needed Nestle food and beverage products are available to the consumers. Because of its determination and tenacity, consumers had access to Nestle products within 6 days of the lockdown. A human touch was afforded in meeting the nutritional needs of a 12-year-old child, a paralytic stroke patient in Indore, a city in the state of Madhya Pradesh, urgently needing Peptamen, a nutritionally complete peptide-based formula, specifically designed for people who cannot digest or absorb nutrients from conventional foods. This item was not available anywhere in Madhya Pradesh. With just one packet left that could last her only 5 days, it was a race against time. Prateek Puranik at Nestle Health Science worked tirelessly with local government officials and BlueDart to get the necessary permissions and ensured that the package reached her all the way from the city of Ahmedabad in the state of Gujarat. It was through sheer determination that the product traveled across 2 states to reach the young patient right on time. Rising to the challenge has been the task our sales executives have done for many years. Sales executive M. Balaji, went beyond his call of duty in these challenging times by supporting the distributor, Ramakrishnan, who has a distribution center in Hosur in the southern part of India. Since Ramakrishnan's sales team and delivery boys could not report to work because of the lockdown, M. Balaji took orders, loaded the stocks in Ramakrishnan's car and together, they delivered the products to the supermarkets and grocery stores, working tirelessly from 6:00 a.m. in the morning till 11:00 p.m. at night. Because of the determination of M. Balaji and Ramakrishnan, the people of Hosur had access to the required Nestle products. Keeping our commitment is a way of life. Swapan Kumar Roy, a distributor in Kolkata, serviced 300 retailers alone with the help of just 1 staff member and personally delivered stocks in Kolkata. Your company will continue to contribute towards society and build for a sustainable future. I believe that a company that is able to stay the course on its purpose will remain the most resilient. If there is one word that encapsulates Nestle presence over 10 decades in India, it is a word trust. Your company has been a partner in India's growth for 108 years. And as we move into the new decade, it will continue focusing on Make in India and made for India. It is a matter of great pride that 99.7% of the employees starting from me are Indians, who work across the 8 manufacturing locations, 4 branches and our head office. Your company has been working with milk farmers since 1961 and today partners with over 100,000 milk farmers in India. It is also working with 3,500 coffee farmers and over 1,250 spice farmers. Nestle India's products are distributed through 1,700 distributors and lakhs of retail shops who are creating employment opportunities for fellow Indians and contributing to the economy. Our founder, Henri Nestle, envisioned making a contribution to a healthier future right from the start of the company's history. We were born of a societal cause. Our founder, Henri Nestle, developed Farine Lactee, which is French with for milk with wheat flour and sugar, which saved the life of a child. He embodied many of the key attitudes and values that are part and parcel of our corporate culture to this very day. Right from the birth of Nestle more than 150 years ago, its purpose has remained constant, enhancing the quality of life and contributing to a healthier future. Shaping a healthier world around us through products, education, information and intervention has always been our priority. Although our company has increased the number of its products and its geographical reach, its passion for its existential purpose remains unchanged. The introductions in 2019 range from entry into the organic food category with CEREGROW organic selections, traditional Indian breakfast, Maggi, poha and upma to the launch of the world's #1 cocoa-malt beverage, Milo in India. Your company's knowledge, expertise and credibility is a strength which it wanted to share with the consumers, hence, a web platform, asknestle.in was introduced. This provides authentic, scientifically validated, credible information to the consumers on the needs of growing up children, nutritional nourishment, catering to picky eaters and tools to track a child's growth. And the aim is to have a positive impact on people's lives and create maximum value for consumers. This thought gives meaning to what the company does and serves as a lighthouse for aligning the actions. Nestle India's positive impact on society focuses on enabling healthier and happier lives for individuals and families, helping develop thriving and resilient communities and stewarding the planet's natural resources for future generations with particular care for water. The company has already reached out to nearly 5 million beneficiaries directly and indirectly. Across the societal initiatives and the flagship program, Nestle Healthy Kids commemorated 10 years in 2019. The focus on plastic waste management and determination to make a difference has witnessed most of the key brands like Maggi Noodles, Nescafe and KitKat becoming plastic neutral in the year 2019. What this means is that the company manages an equivalent or a higher amount of plastic waste than these brands generate through their consumption in the market. Your company believes that purpose is built into every aspect of the business. It speaks of a higher cause of trust and responsibility. I strongly believe that it goes far beyond the role that we play as managers and executives. People, therefore, are looking for companies they can believe in, trust in, a company that has a social impact, which can change lives positively. The future will demand increased commitment from companies, making sure that business stays committed to the community, the consumer and the planet. It is my hope that your company will stand tall in making its contribution to this important endeavor. Before I close, I wanted to share with you the 5 principles that your company shall abide by through this crisis and beyond. Firstly, quality and unimpeachable safety of products will always be your company's signature of trust with the loving consumers. Secondly, we will continue to encourage and protect like a banyan entry, our ecosystem of suppliers, vendors, customers and stakeholders as we come out of this pandemic. Thirdly, we will continue to reinforce our culture of people first to define work practices, further strengthen hygiene and safety protocols in the post-COVID world as nonnegotiables and to ensure key decisions pivot around the people impact. Fourthly, we will continue to be an innovative, fast, focused and flexible company, and will use Nestle's competence in science, technology and nutrition to address needs of the post-COVID world. And finally, we will continue to be sensitive, empathetic, responsive and responsible to the community that surrounds us by making corporate compassion our way of response. Your company has successfully overcome many challenges and is confident that together with all those who are fighting against this pandemic and its consequences, we shall overcome this time again. I would like to thank you all for your commitment towards your company and for the loyalty and support. This in itself truly inspires me and my team at Nestle India to work towards reaching new heights and help in creating shared value for all our stakeholders. I wish all my shareholders today the very best of health. Thank you very much for listening to me. Thank you yet again. I will now take up the notice of the 61st Annual General Meeting dated 20th May 2020, which together with the audited accounts and Board's report has been duly sent to the members by e-mail and public notice published in newspapers as stipulated. The auditor's report for the year ended 31st December 2019 does not have any qualifications, observations or comments on financial transactions or matters, which have any adverse effect on the functioning of the company. In view of the same, there is no need to read the auditor's report. Your company provided members remote e-voting facility on AGM agenda items from 16th June 2020 from 9:00 a.m. to 18th June 2020 till 5:00 p.m. E-voting facility is available at the meeting. And as mentioned in the notice, at the end of discussion on the resolutions on which voting is to be held, there will be electronic voting using the e-voting platform of NSDL for all those members who are participating in the meeting, but have not cast their votes by availing the remote e-voting facility. The icon for e-voting is available on the top of your screen, which will redirect you to the e-voting portal of NSDL. The e-voting facility is active and will be closed during the closure -- will be closed along with the closure of the meeting. I will now proceed with the agenda as per notice of AGM with 3 ordinary business items listed as agenda Items 1 to 3 and 4 special business items listed as agenda Items 4 to 7. Agenda Item 1 is for the adoption of audited financial statements of the company for the year 2019, including the balance sheet as at 31st December 2019, the statement of profit and loss and cash flow statement for the year ended on that date and the reports of the Board of Directors and auditors thereon. Agenda Item #2 is for the confirmation of payment of 3 interim dividends aggregating to INR 101 per equity share for the year 2019 out of current year profits and a special interim dividend of INR 180 per equity share out of accumulated profits of previous years that is surplus in the profit and loss account and declaration of final dividend of INR 61 per equity share of INR 10 each for the financial year ended 31st December 2019. Agenda Item #3 is for the appointment of a director in place of Mr. Martin Roemkens with the DIN 07761271, who retires by rotation and being eligible, offers himself for reappointment. Now the 4 special business items, which in the opinion of the Board are considered unavoidable. Agenda Item 4 for the ratification of remuneration of Mrs. Ramanath Iyer & Company, cost auditors, firm registration number 00019, appointed as the cost auditors by the Board of Directors of the company. Agenda Item #5 for my reappointment as a Managing Director of the company. My DIN number is 07246738 for another term of 5 consecutive years effective from 1st August 2020 till 31st July 2025 on the terms and conditions of reappointment and remuneration as contained in the draft agreement. Agenda Item #6 for the appointment of Mr. David Steven McDaniel with DIN number 08662504 as the Whole-time Director designated as Executive Director, Finance and Control and Chief Financial Officer for a term of 5 consecutive years effective from March -- 1st March 2020, unless until 28th February 2025 on the terms and conditions of appointment and remuneration as contained in the draft agreement and Item -- agenda Item #7 for the appointment of Mr. Ramesh Prathivadibhayankara Rajagopalan with DIN number 01915274 as an Independent Non-Executive Director of the company with effect from 1st July 2020 to hold office for a term of 5 consecutive years up to 30th June 2025.

This year, being a virtual AGM, there are 3 ways in which members can ask questions on the AGM agenda items. The first way is for members can preregister as a speaker at least 48 hours in advance of the meeting at the designated investor e-mail address of the company as mentioned in Note 5E of the notice of the AGM. The second way is by members can submit their questions 48 hours in advance of the meeting at the designated investor e-mail address of the company as mentioned in Note 5D of the notice of the AGM. And the third way is for members can during the meeting, post messages on the communication box available on the screen to each member participating in the meeting. So if members have missed preregistering as a speaker or submitting questions in advance, they can also ask questions by posting messages on the communication box available on the screen. I now invite the esteemed members who have preregistered in advance as a speaker. In the interest of time, I would request all speakers to restrict their questions to a maximum of 3 minutes. I have pleasure to invite our first speaker member, Ms. Sakshi Sanjeev Kapur from Mumbai, having client ID number IN301549/3149024 to speak, please.

I just have one question. A lot of companies have decided to make the work-from-home policy a regular feature in their HR-related practices. So does Nestle India also have this in mind considering the times we are in right now?

Thank you, Ms. Kapur. I would have pleasure to invite our next speaker member, Ms. Hutokshi Sam Patel from Mumbai having client ID number 1203710000018446 to speak, please.

Thank you very much for giving me an opportunity to speak. Our respected Chairman, Mr. Suresh Narayanan, Mr. David McDaniel ,CFO; Mr. [Technical Difficulty] Director, SVP and Secretary and all other directors, our Non-Executive director, whom I often know Madam Swati Piramal, Madam Roopa Kudva and Madam Roopa and Rama Bijapurkar. I'm from Bombay. I wish everybody a very happy day and prosperous day to you all. Now I put my questions. Sir, any plans [indiscernible] to split that share in order to improve the liquidity? The retail holders are unable to buy and add large quantities of shares in the portfolio -- Nestle shares in the portfolio. So I request for the split of shares to the management and to the Board of Directors. Second. Third, the company's debt is almost 53.1 crores or why has it increased in this year? And any new programs to repeat the same and [indiscernible] My next question is, why there is a decrease in investment made by the company severance in government securities? Also your cash and cash equivalents has reduced this year 69, 70. Why is it reduced and why -- and where is the cash utilized? Sir, on Page 23, management has flawlessly focused on sustainability, but analysis has shown from 204 to 219. You could have provided me with the comparison data for the last 5 years. Please give us an opportunity, we are from Bombay. Sir, on Page 27, shareholders fund is reduced drastically. In 2018, it was 36,000 and in 2019, it's become 19,000. Why is it reduced? There is a cautionary statement inserted in your report, which is mentioned on Page 39. Why this -- actually, it is very good cautionary statement. But why is it included in your directors' report? Sir, now I speak from the point of view of our customers as I'm also one of the very good customer of Nestle, whole family. Sir, many of your products are not available in Bombay. Bombay is a financial hub of India and a market very prosperous in Bombay. Can the supply chain not be improved to penetrate Mumbai market in a much bigger and better way? The reason I say is that because due to COVID, people's focus has shifted from luxury items to necessity items. FMCG companies have introduced. I don't wish to name those companies, but they have introduced a variety of their products in this COVID and have gained quite a number of market share. Sir, you are a leader in the market with Maggi Noodles. Has its market share reduced in last 1 year and more specifically in the last 3 months because of COVID? Has the market share reduced in any of the other products mentioned on Page 9 of your report? Sir, company provides loan to its employees, as mentioned on Page 70. What is the nature and interest and tenure? Also the company provides advances to its employees. What is the difference between the loans and advances given to the employees, as mentioned on Page 71, point #15-- 1-5. Is Nestle management going to provide any economic platform, e-commerce platform to our customers? Customers can directly order their favorite items of Nestle products on online with a minimum order, at least INR 500 or INR 1,000, whichever management deems appropriate because it will be very comfortable for the customers' e-commerce. All the Nestle products are fabulous, excellent and worthy of being the market leaders. Our focus should be to reach the end customers even in every loop and corner of our country with the availability of the variety of products, either physical or online. Sir, Nestle was started by Henri Nestle with a product name as Farine Lactee made up of milk, wheat flour and sugar in Switzerland. Does this product still continue with Nestle? If not in India, at least in Switzerland? Sir, your Milo product is just excellent, uncomparable. I love this drink, whole family has it, but very sad that it is not available in Bombay market. Why is it so? Why we the people of Bombay are given the step treatment. Please, sir, I wish your product to be available. Then sir, do you plan to shift the office to Mumbai by any chance? Procter & Gamble and Gillette have shifted their registered office to Mumbai. Does Nestle have any plans for that? Your some brands have faced -- some brands mentioned on Page 10 are not available in Bombay. Sir, you have also mentioned of number of kiosks, which is present in other places. Are there any kiosks in Bombay? Or do you plan to open any kiosks in Mumbai, maybe in Maharashtra, but especially in Mumbai? I thank one and all for the same, especially our lady Diksha Dange, Mr. Rajendra Agarwal of Murli's team, who has given too much of help and support to us to allow me to give the speech. I thank the management and the employees for their excellent results and wish them all the very best. I support all your resolution. Thank you very much, sir. I'm from Mumbai.

Thank you. Thank you, Ms. Patel. Thank you very much for your extensive questions, which we will deal with in our meeting today, and thank you for your numerous suggestions, which are extremely valuable, and I'm deeply grateful as the Chairman and Managing Director of this company to receive them from you. Thank you, Madam.

I wish you also good luck and good healthy, happy life.

Thank you. Thank you. Thank you, Ms. Patel. Thank you very much. Thank you for your blessings. I have pleasure to now invite our speaker member, Mr. Ravi Kumar Naredi from Bhilwara, Rajasthan, having client ID number IN301983/10275573 to speak, please.

Okay. Respected Chairman and Board of Directors of Nestle Limited. First of all, we wish Shri Suresh Narayanan, MD -- for appointment as MD for further 5 years and [indiscernible] growth remain good and hope these resolutions will pass with majority. Sir, will you tell something CapEx plan for next which type CapEx we are planning and any such plan we have where we can put more manufacturing in India or Southeast Asian countries like Bangladesh, Nepal, Myanmar. Where is the profit margin [Technical Difficulty] over previous year. More such margin rises on card in next year...

Thank you, Mr. Naredi for your question. I have pleasure to invite our next speaker member, Ms. Homayun F. Pouredehi from Mumbai having client ID number 1202890001487824 to speak, please. Madam, you are muted?

Sir, should we proceed to the next question?

Yes, I think we will, and we will come back to Ms. Homayun once the voice is fixed.

Correct.

We will come back to Ms. Pouredehi because her voice is muted. I have pleasure to invite our next speaker member, Mr. Kanishk Khullar from New Delhi having client ID number IN300360/20194749 to speak, please.

I thank the team at Nestle is doing a fantastic job. Even in this tough time, they do a great job in running all the factories, almost 70% production. It's absolutely remarkable. I just had one question as an investor. Have we considered splitting the share and giving some rights issues to the investors? That's all I'd like to say.

Thank you. Thank you very much for your question. I have pleasure to now invite our next speaker member, Mr. Devender Khanna from Delhi Client ID number IN302316/10005682 to speak, please.

[Foreign Language]

[Foreign Language] Thank you for your faith and thank you for your confidence in the company. Thank you very much, Mr. Khanna. I have pleasure to now invite our next speaker, Mr. Seetharaman Radhakrishnan from Bangalore, having client ID IN300183-11300965 to speak, please. You are muted?

Sir, should we move to the next question?

I think we will come back to Mr. Seetharaman Radhakrishnan. Like Ms. Pouredehi, his voice is also muted. We can come back to him. I have pleasure to invite our next speaker member, Mr. [ Kasi T. ] from Pudukkottai, Tamil Nadu, client ID number IN302902/42929028 to speak, please.

I thank Nestle for giving me an opportunity to participate in this AGM from small town. I'm Thiagarajan from a small town from Pudukkottai. I'm a shareholder for Nestle for the past 50 years, but more than 50 years I'm a shareholder. We are in business in 1946 and we are associated with Nestle from 1952. It's almost 68 years. First of all, I would like to congratulate MD and CEO, Mr. Suresh Narayanan and Mr. Ravi Ramchandran for making my life [indiscernible] what are the plans of the company to overcome this corona crisis [indiscernible] profitability of distributors or companies? Milk and baby foods nutrition should be the mother brands of Nestle, giving major chunk profit of the company, but recent few years, the sales for these products are coming down. I would like to know the plans of the company to revive the premium brands? Third one is the [indiscernible] being a big concern [indiscernible] on this? What are the steps are being taken to move this [indiscernible] why not we go for expansion by buying another companies, so that you can also expand your profit and our profit will get expanded. Hope you will do each. Finally, I'm a distributor for Pudukkottai from 1952. I'm part of 2015. Thank you once again to all. Finally, I wish Mr. Suresh Narayanan to continue as CMD for another 5 years.

Thank you. Thank you, Mr. Kasi Thiagarajan. Thank you for your long association with our company, Nestle. It is a matter of enormous pride that we have you as a partner for so many years and also that you are a proud shareholder of the company. I thank you for your questions. I thank you for your suggestions. I thank you for your good wishes, and we will address your questions during the course of this meeting. Thank you very much, Mr. Kasi Thiagarajan. I have a pleasure to invite our next speaker, Mr. Yash Pal Chopra from Delhi, client ID number IN300708/10592558 to speak, please.

Sir, I am an old shareholder for the last 40 years. And I know that the shares at that time was the prevailing price was INR 100 or INR 100, INR 150 and all that. Now it has scaled maximum height of INR 17,000 and is rolling between INR 17,000 to INR 18,000. And had not the corona been there, it must have crossed INR 20,000 in the 2020 itself. Sir, I will feel myself guilty if I do not compliment the honorable management, the genius persons sitting around you, Madam Swati Piramal for whom I'm a very, very big fan of hers because I'm also a shareholder of Piramal Group also. And sir, I'm very, very proud of that our company has given us enormous wealth through dividends and dividends only, but they are a little bit conservative on the matter of bonus. So I would -- and that is the main reason that the liquidity in the market is too low. So I would request, sir, that if you can think of splitting the shares and after submit, you can just offer us the right shares because that right shares meaning that will be like a mini bonus to us, and that will definitely encourage the share price in the share -- stock market. And that will scale the new heights if you and your management just takes a decision like that. Sir, I'm proud of the management -- the capacities and the capability of management because if you remember, in 2015, when there was a big storm on Maggi by that great baba. So at that time, everything was shaken and the share had fallen from INR 10,000 to INR 5,000 and at that time, everybody concerned with the company, from the management to the shareholders to the retailer to the distributor, everybody was shaken. But at that time, if you can rewind your AGM, I had said that, [Foreign Language] because every, every attack is a blessing in disguise because that shook our quality control department. And now the time is when our Maggi, which was cursed at that time [Foreign Language]. So sir, at that time, most of our people, our shareholders as they were pained, they spoke with so many suggestions and suggestions and suggestions and that meeting went up to 1 p.m. And that was the longest meeting there, the people had just cited so many new products, and the company has virtually accepted most of the suggestions and that came with a very, very long list of the products. Now our products are if I say that is just like a [Foreign Language]. But sir, now the time has come that we have to stop that [Foreign Language] and we have to concentrate on the 5 partners, and those 5 partners are Maggi, those 5 partners are Milkmaid, that is Munch, that is it KitKat, that is Nescafe. So that these are the 5 partners which are giving you the maximum, maximum revenue. So you must ask your research department to find out a way to add more feeders to better -- add to these products rather other than going for the new products, so that will be a big achievement. Sir I wanted to ask a few questions on this COVID and all that, but you explained in detail. I wanted that you just maka a COVID based fund for your employees and not only for your employees, even for those retailers, those person who are supplying milk and farmers and the distributor and your transporter your carriers, all for all those, you must make some fund. Fund for the organized sector, your employees fund for the organized -- unorganized sector, for those who are just with the company, who are the [ bread ] for the company, oxygen the company. So sir, I can speak a lot. So at that time in 2015, I had given one good suggestion, which your management has accepted. I said spend money on the costlier brand ambassadors and because the company was earlier spending, hiring those super specialty celebrity -- celebrities and spending a lot of money. And when those -- that thing they saw a muggard, then the media people went to their brand ambassador. He said, no, I'm not with the company with the last, last, last so many months. So those people who are just fair-weather friends, we have to keep those fair-weather friends far off and you accepted my suggestion. And thereafter, I didn't see any super celebrity over there and the government saved a lot of money. It means that our company saved a lot of money on that thing because our own product are celebrities. Our own products those they need not have the promotion from anybody over there, sir. So sir, I have got a full faith in you. And I know that if that storm of 2015 was tackled and tested and you just came out successful. So this storm is a worldwide storm of corona will be disappeared in the times to come, and we will win the game. And we are sure that our share will cross 20,000 and our profits will be -- will not be affected, and we will just regain, we will regain, we will control, we will keep a tight control on our market, and we will reach to every nook and corner of the country because that slogan of spoiling Maggi [Foreign Language]. So sir, that was a blessing in disguise. So we have to be rather thankful to [ Maggi baba ji for that. ] So sir, now I just tell you that even this corona that will give you a lot of positive advice, a lot of positive suggestion in the end when you will see. So we have faith in God. We must have faith in God, and we must look after the interest of all the dedicated employees. So in the end, before I close, I would like to thank our Mr. Murli. He's a gem of our corporate sector; and with Mr. Murli, our Mr. [indiscernible] Agarwal, Madam Diksha and Mr. Isha who has just provided me the facility to talk to you, and Mr. Bashan Singh. So all the team members, they deserve kudos, they deserve complement. So sir I'm thankful to all the concerned, and those dedicated employees. I wish them best of luck for the -- and a health and a very, very safe health in the times to come. Best of luck from my side. Thank you, sir. [indiscernible] this time, you have not given me any poem. I will just give you only 4 lines, only four line, only four lines sir. [Foreign Language]. So I have got great regard for our products and for the producers of the product for our great management, for the genius team around you. So best of luck to you, sir. Thank you very much for giving me the time to speak.

Thank you, Chopra. [Foreign Language]. Thank you, Mr. Chopra.

[Foreign Language]. And that will be very nice, sir, Just completed story. Thank you, sir. Best of luck.

Thank you, Mr. Chopra. I have a pleasure to invite our next member, Mr. Dipankar Purkayastha from Delhi client ID number 1204-7200094171AA to speak, please.

So I have 2 questions and a suggestion. So first question is in the matter of the Union of India complaint, they saw the National Consumer Dispute Redressal Commission, seeking a total of INR 6,399 million from the company. The company has not made any provision. The total provision of INR 7,939 million for litigation and other disputes does not include any provision for this matter. Now we have seen in the telecom industry where a long-pending litigation with the Union of India [indiscernible] adverse verdict and consequential huge losses for the industry. So my question is, would it not be prudent to start building up provisions on this scope because the telecom companies are widely criticized for not building up provisions. Specifically, I would like to know the views of the auditors of the company on this matter, apart from the views of the company management. My second question is as per Note 33A1, the present value of obligations under the pension scheme unfunded plan has gone up from INR 15,923 million to INR 19,106 million. That is 20% up in 1 year, mainly because of actuarial losses, interest rates and mortality assumptions. Consequently, under Item #F of the P&L account, the hit on account of remeasurement of defined benefit plan stands at INR 2,036 million, which is more than, I think, 5x over the previous year figure of INR 464 million. Sir, Nestle is one of the very few companies in the country, which still runs a defined benefit pension plan. Almost every corporation in India including [indiscernible] phased out defined benefit pension plans and switched over to [indiscernible] so in the light of the declining interest rate scenario in the country and the increasing burden [indiscernible] since [indiscernible] into execution plan for pension scheme, so that the shareholders of the company are spared this increasing burden, which is going to go on increasing with the declining interest rate scenario. My suggestion is that some of your competitors like [indiscernible] have tied up with these food delivery companies like Zomato and Swiggy for distribution of their products from their distribution [indiscernible] very, very accessible. So will Nestle see this trend development [indiscernible] with respect of their products from their distributors. Thank you.

Thank you, Mr. Purkayastha, for your questions and for your suggestion, which we will deal with. I have now pleasure to invite our next speaker, member, Mr. Raja Venkata Subramaniam; from Chennai Client ID #1301240005401893 to speak, please.

Good morning, Mr. Chairman and members of the Board. Just to -- I mean I think one suggestion basically, I'll start with this virtual meeting is really beneficial for a shareholder like me sitting in Chennai, I'm able to participate in the AGM of the company, which otherwise wouldn't have been possible, whether it's COVID or no COVID, I should have traveled all the way to be to participate in the AGM. But now the benefit of the virtual AGM has really given me this opportunity to participate in the AGM. And not only that, I thank the board for giving me an opportunity to speak in this meeting. I have just 3 questions. During COVID and post-COVID, how are we ensuring continued supply of our essential food products? The second question is, today, the work from home concept has really caught up. And most of these IT companies in Chennai have really asked the people to start working from home. And the people are aiming to move back to their native places rather moving away from cities. So my question is all economists are saying growth from India can happen only in rural markets, instead of urban markets, what is the plan of our company on rural market growth? The third question is other food companies. like ITC, Marico, basically food company, are also introducing new range of products like sanitary, et cetera. Is there any plan for our company like this? Thank you, and thank you for giving me this opportunity.

Thank you. Thank you, Mr. Subramaniam. Thank you for your constructive questions and also thank you for your feedback on shareholders being able to participate from anywhere in the country in this platform. I think that's an important observation. I have a pleasure to now invite our next speaker member, Mr. Ashok Bhavsar from Baroda, having client ID #1202900000003088 to speak, please.

Good morning, everyone. I hope you all are safe and sound. My questions are mostly on the business environment and business outlook as highlighted in the director's report. Starting with firstly, I would like to know that we have been following the cluster-based strategy for quite some time now. Considering the current environment, are we looking at any additional cost benefits which can help and improve our margins. Second question relates to e-commerce contribution. Can you highlight what is the current e-commerce contribution? And how our company plans to scale it up going forward [indiscernible] prepared dishes and cooking especially on the Maggi. So during COVID crisis, have you seen an increase offtake for our Maggi and the newer variants of Maggi as customers start looking for new varieties and they're mostly staying at their homes. The third -- the fourth question is on the premiumization trend for Nescafe Gold. How has that progressed over the last 2, 3 months, considering a little bit on the income effect, there are some talks on the slowing economy and things like that. The fifth question is on the Nestle Professional. How much is that as a percentage of our total domestic sales. Lastly, if you can just highlight what is our current capacity for the plant? How much is it functioning? And whether do you foresee any ability for us to take price hikes for the current year? Thank you so much. Wish you all the best.

Thank you. Thank you, Mr. Bhavsar. Thank you for your questions. I have pleasure to now invite our next speaker member, Mr. Ranjit Hingorani from Indore having DP Client ID #IN301151-20860157 to speak, please.

Honorable Board members and respected Suresh sir. I would like to congratulate you for your tenure being reviewed by the Board of Directors for the next 5 years, and it's a pleasure to have you with us. Under your leadership, certainly with post-COVID, we will fly in colors. We'll pass through this phase in flying colors. Sir, thank you also for giving us opportunity to speak on the 61st Annual General Meeting, through video conferencing and certainly thank Murli sir, for that -- for this. And through my comfort of my home, I can now ask my questions. So really sir, I want to express my feeling with regard for Nestle. It's a privilege to be a shareholder of the company. It gives a lot of confidence that going forward with the culture of trust, respect, responsibility, innovation and wealth creation. So [ nicely ] this together. Sir, I as a shareholder will leave behind a legacy of great quality stock for my children. So really, I feel really pleasure to be a shareholder of this company. And sir, I want to understand from you about the Nescafe brand, which has not -- this has underperformed -- [indiscernible] year in terms of volume and value. Sir, the competition in soluble coffee is at our doorstep. So are we not thinking of renovating the Nescafe Classic brand with more putting the [ better in ] its core product value proposition for the consumer? This is my first question. And sir, I see in the cold coffee category where the millennium gets first introduced to the brand, cold coffee. The canned category is -- looks to be very promising. So are we -- why are we not playing the volume game in the coffee -- cold coffee canned category. And my last question is, sir, with regard to the agri reforms which the government has taken up, which will certainly make the earnings of the rural population better in the next 5 years. Is there a case for business opportunity for innovation and introducing a product for the rural consumer and make the larger business out of it. Is it a good opportunity, which is opening up, sir. And sir in my concluding remarks, I want to really thank Nestle management for giving us a very liberal dividend. And Also, I want to give my good wishes to the Nestle team for offering wonderful products and delighting consumers for generation to come. Thank you so much, sir.

Thank you. Thank you, Ms. Hingorani. Thank you very much for your very kind comments and for your happiness as a shareholder. I think I'm very touched by your statement that you're leaving behind a good legacy for your children. I think values and purpose in a company are important for longevity, and I thank you for pointing that out to me today. I have a pleasure now to invite our next speaker member. Mr. B.S. Srimal from Kolkata having client ID #IN303719-11033159 to kindly speak, please.

Mr. Chairman sir, and member of the Board, and my fellow investor assembled at the 61st AGM of the Nestle from all over India and maybe from abroad. I am C.A. B.S. Srimal, I would like to take this opportunity to pay my tribe to the heroes who are protecting so bravely our frontier and party and pray for the well being of all man kind around the world and especially of our countrymen in this pandemic. I am extremely grateful to Shri Suresh Narayanan, the Chairman of the company for giving me this opportunity to interact and take part in the proceeding of the AGM and put forward our thoughts and views. I am sure Mr. Chairman, who take our views in proper perspective and would respond fully so that we go back more enlightened. I'd be failing in my duties, if I do not congratulate for the wonderful result produced by the company under the most able and dynamic leadership of Suresh Narayanan and [ CEO for Global. ] And for the reward given to the investor by way of very handsome dividend of INR 342. And with the hope and belief that the same dividend would be maintained and continue for the current year as well. While talking about the dividends, sir, I would like to point out that the -- unclaimed dividend -- so the proactive steps for the unclaimed dividend so that the investor who has not claimed it so far could get it before it is too late. As we are aware of the [indiscernible] provision of law now prevailing in this regard. By forfeiting the even the shares of the company, those who fail to claim the unpaid dividend. Now I would like to give a few suggestions for your kind consideration and adoption in future annual report, a short profile of the Board of Directors for better understanding of the working and management of the company. The early AGM as balance sheet was signed by the auditor as early as 13th February to avoid the clash with March ending accounts. And also, it would have enabled investors if the meeting held before March to get a tax-free dividend as now dividend is taxable at the hands of the investors. Sir, I happened to be one of the initial investors and feel that their patience and loyalty be recognized and rewarded by the company. In view of the charge change affected by the Companies Act 13, the AGM is a mere formality, as all the voting, et cetera, are completed beforehand mostly. Now let me transfer my attention to some of the points in accounts. Sir, could you enlighten us as for the company's CapEx plan for the current year and also keeping a view the new tax concession announced by the government. What are the companies plan for new product lines in the current year keeping in view that we are in food and health care line for improving the immunity system looking into the present pandemic situation. In Page 137, the company has shown foreign exchange earnings to the tune of INR 6,384 million, against outgo of INR 29,420 million. Could you give us some idea how to bridge this gap in future. Page 95, expenses paid to Nestle and different companies of the group amounting to INR 6,204 million against INR 5,270 million last year, would we not as per PMS call try to be outmaneuver and try to make India, vacate in India, for those products, we are buying from other Nestle Group companies. Buying over and above, there are also I find many purchases which are made from the Nestle group to the tune of big amounts. So in that respect, also, I'd like your attention and to see if we can make it in India. Could you enlighten us, sir, as the cost of this present AGM who is in a virtual mode vis-a-vis the past AGM. I would also take the opportunity to welcome our new CFO and hope that under this guidance and leadership, the company will still do better. Sir, I feel the balance sheet if signed by all the directors, including, of course, the independent directors would have given more confidence to the shareholders. I am in a know-how that it is not required as per the act. But for the [indiscernible] I believe this would be helpful. With this, I would like to conclude, and thank you so very much for giving me a very patient sharing. I would also be failing in my duty if I do not recognize the service given by Ms. Diksha in this respect yesterday, to me, helping me to come and talk in this virtual meeting. And before I close, I also recognize that this virtual meeting has given me the opportunity to participate in the meeting. Otherwise, at this age of mine, I would not have been the privilege to come and join the meeting in New Delhi. With this, [indiscernible] and thank you again, very so very much for giving me this opportunity. Thank you, sir.

Thank you. Thank you very much, Mr. Srimal for your very cogent, very articulate and very clear suggestions as also observations, which we will deal during the course of this meeting. I also would like to thank you as an old and respected shareholder of our company for your good wishes and for your kindness at this meeting. Thank you very much. I believe that we still have -- we were unable to connect with Ms. Pouredehi and also with Mr. Seetharaman Radhakrishnan. So, if Diksha you could do that, I'd be grateful.

I'll do that, sir. So we will take the next question from Mr. Seetharaman.

Yes. A very good morning, a very hearty congratulations to the Board of the company. for a wonderful performance again. And very heartening to note also the initiatives that have been taken in the light of the COVID complex. I very quickly like to come to the questions. A couple of questions that I had. This is more around, pardon me for also diverting attention to read as I made some notes. So one of the points that I would like to inquire about is that the volumes of the categories are generally fairly stable over the last few years. Is there any initiative for more aggressive growth in these categories. Typically, I would like to highlight dairy and beverages. The second point coming from here is around the recent launch of breakfast cereals and how you see the performance currently and how you would look at it in the years ahead. One of the initiatives that Nestle has taken in the past is around the bottom of the pyramid or the lower income categories. So has there been any further development on this team and as well on premiumization because today, there are so many food products of a premium nature, which are available in the marketplace. So it would be nice to know if there are any byproducts in the pipeline in the coming year or 2. And also, there is a lot of commodification particularly in the categories of beverages and dairy, if there is anything that can be expected in the near future. And finally, all FMCG companies always have been trying to grow and improve or increase penetration in rural or suburban markets, [indiscernible] markets. So what would be the initiatives in this area? I thank you for the opportunity to participate and interact with the members of the Board. And apologies for the technical issue earlier. Yes, thank you so much.

Thank you. Thank you, Mr. Radhakrishnan for your very pointed, very clear questions. I'm sorry that we could not connect earlier, but we have been able to get your questions and I'm deeply grateful for that. Thank you. Thank you, Mr. Radhakrishnan. Now Diksha we have...

Sir, from Ms. Homayun. We have the question over the audio. So Ms. Homayun, your line is unmuted. You may go ahead. Ms. Homayun, you may go ahead. Sir, we will proceed.

Okay. We are not able to still establish contact with her. So let's see that during the course of this -- the answer sessions if she -- if we are able to get in touch with her. So with this, we have completed all the speakers except for Ms. Pouredehi, which we will try and reestablish contact. The company secretary will collate the questions raised by the speakers which will be answered after the response to the questions that have come on the e-mail. Next, the question that was sent in advance by e-mail. I would like to thank the esteemed members who have sent their questions in advance to the designated investor e-mail of the company. The first one is by Mr. Nitin Narlekar, DP Client ID #IN30082911351982 has sent an e-mail appreciating the stakeholder value created by the company in the long term, even under difficult circumstances, earlier on account of the Maggi fiasco, and also in today's COVID environment. He has asked a few questions, which I would like to respond to. Number one is company has been reporting satisfactory volumes growth over the last couple of years, which is commendable, whether most of the volume growth has been derived from the prepared dishes and cooking aids and chocolates. The second question he has is Infant Nutrition has reported very subdued volume growth. And most of the growth is value-driven, which has been consistent over the last decade. What our efforts and initiatives undertaken to revive the volumes in this segment and the medium- to long-term prospects of this business. Nescafe -- number third next question is Nescafe is a terrific brand, but appears to be unable to capture the true potential with volumes struggling over the years. Are there any initiatives to revive this sagging segment? And he has added there, please. Number four, please share the long-term road map of the business development and new initiatives across the business segments. So I would like to thank Mr. Narlekar for his compliments for the company and also for asking some very clear questions. I would just like to answer the questions in terms of the following observations. Number one is that you are right that both prepared dishes and the chocolates and confectionery business have exhibited remarkable growth in the last couple of years. Coming out of the Maggi crisis, I must say that it distributes to all the stakeholders, the confidence of the shareholders, the employees of the company and all the partners. And of course, the love of the consumers that Maggi come back to market leadership very, very quickly. Today, it is undisputed market leader. We have crossed the 2014 volumes that we had sold as a company. So we have come back from the crisis quite strongly. And I believe that we are also now looking at greater degree of aggression and confidence, both in the prepared dishes category and of course, in the chocolates and confectionery category as well. Coming to your observation on the Nutrition business, yes, Nutrition is a high-value business. But I think it is one of the core competencies of the company. The company was founded in the product, as I mentioned, Farin Lactee. And incidentally, the Farin Lactee, still exists today after more than 154 years, it is called Cerelac. So that's one of the brands of the company. The nutrition business is a business that has resonance only if you are not able to breastfeed your child. And I think that is always the best for children. Breastfeeding is the best practice. If you are not able to for any reason is when the nutrition products of the company come into play. I think these have enjoyed enormous trust with consumers, with the medical fraternity. And indeed, we have enjoyed some pretty decent growth in the last couple of years. We look forward to this business with greater confidence as consumers seek better nutrition, better immunity and more efficacious and more trustworthy products from the company. I think this is a category that you will see expansion, and you will see greater focus. The coffee business, I think there is a little bit of a mixed issue there. The domestic coffee has actually had 3 years which have been marked by some very sharp volume and value growth. But unfortunately, our exports to Turkey, which was one of our exports to an affiliated company of ours, has undergone -- has come down quite sharply because of a realignment of capacities in Europe as a consequence of which we have not been able to get that opportunity. So that's why you have seen a slightly muted picture there. But the degree of aggression in coffee continues to be high. Our recent forays into Nescafe Gold has been very encouraging, especially in the COVID period. This is a time when in-home engagement of brands is extremely important. And I think during this period, we have seen some increased traction for Nescafe Gold because consumers have got the time. And also, there are exciting new opportunities like Dalgona coffee, for example, which has got a very, very good combination with Nescafe Gold. So I think the coffee business will also be a business where we will continue our aggression. As you are aware, Mr. Narlekar, we are market leaders in the instant coffee business. And I think as our team shareholder, Mr. Chopra, identified it as one of the key brands of the company, Nescafe, I think the energy of that will not be reduced in the coming periods. So the longer-term road map of the company would really be on the core categories that we are in, milks and nutrition, prepared dishes, chocolates and confectionery and of course, coffee and beverages. In addition, we have had new ventures like breakfast cereals our Nestle Health Science business, which is also growing at a fairly good clip. I think the time, I believe, honestly, ladies and gentlemen, for the company has truly come. This is the time in the post-COVID world where consumers seek trust, they seek quality, they seek science, technology and better nutrition and also better immunities for the family. These are all areas where Nestle has got core competence and strength. And indeed, we will see some action from this in the coming periods. So with that, let me take the next question that has come from Mr. Yogesh Katri, DP Client ID #IN30002010761895 has sent e-mail congratulating Nestle management for the excellent results once again in 2019, showing growth in revenue and result and profitability and asking -- has asked the following questions. Number one, reason for foreign exchange earnings in 2019, going down by 10% and outgo astronomically going up by 71% and its inadequate disclosures. Number 2 reason for higher stock turnover ratio of 38.1 days in 2019 as compared to 31.4 days in 2018. Also the reason for raw material and finished goods holding period deteriorating in 2019 to 14.2 days as compared to 14 days in 2018, and number 3 reasons for increases in payment of general licensing fee by 11% in 2019 from -- that is INR 5,472 million over 2018 when it was INR 4,926.5 million. I would now pass on these questions to Mr. David McDaniel, our Director of Finance and CFO, for his response. Over to you, Mr. McDaniel.

Thank you very much, and thank you very much for the questions. First, if I could just take a second to say how delighted I am to be here today and express my profound appreciation for the very warm welcome extended to me by the Board and all the employees of Nestle India Limited. And in addition, echo the thanks and congratulations to Mr. Shobinder Duggal for his excellence as the company and in particular, for the very high-quality finance and control team that he has developed here which I am very much enjoying working with. So to the questions. The first question about foreign exchange earnings and outgoings. We'll start with the earnings. The earnings are down by about 10%. And the simple explanation is that some of our export business of coffee to Turkey was reduced in 2019. That is the whole reason for the change in the income of ForEx. In terms of outgoings, it's also a simple answer. There's been exceptionally high dividend in 2019 with the payment of the special dividend and all of the increase in ForEx outgoing is related to the payment of dividend to the principal. Turning to the second question, was about the stock situation and the higher levels of stocks at the end of the year of 2019. On Page 27 of the annual report, there is an inventory turn ratio which is at 10.9%. That has deteriorated roughly 10% from 2018. This was a deliberate -- a result of deliberate actions in 2 parts, mainly, one is to increase stocks of raw materials, majorly milk solid and the derivatives because of higher forecasted prices coming. So cost reduction exercise for the future by taking more stock into the quarter 4. And the second reason is for an increase of finished goods stocks again to handle the future. So the forecast sales in quarter 1 of 2020 being higher in line with the continuing growth of the company, necessitated an increase in finished goods stocks in Q4. So 10% deterioration but entirely in line with business requirements. The third question relating to GLA cost. The GLA has indeed gone up in cash terms, but that has gone up absolutely in line with the sales of the company. GLA is paid at 4.5% of the sales net of tax, but the percentage has not changed year-on-year. The increase is entirely in line with the sales increase of the company. Thank you for the questions.

Thank you. Thank you, Mr. McDaniel. I would now take Mr. Dipankar Purkayastha, the client ID #1204720009417188 who had also been one of the speakers. And in fact, he had asked his questions. But for the sake of transparency and clarity, I will repeat the questions. that he had also put through the e-mail. Number one, his question was regarding provision for the matter of Union of India complaint before the National Consumer Dispute Redressal Commission, and in the context of what happened in the telecom industry, the long-pending litigation with Union of India finally resulted in adverse verdict and huge losses. Would it not be prudent to build up provisions, also sought view of the auditors. I would now like to pass on this question to Mr. Murli for response after which we will take up his second question.

Thank you, Chairman. In our opinion, the class action suit that has been filed on issues similar to those that have already been decided in the company's favor [ bought ] by the Bombay High Court in 2015 in Nestle India repetition bearing #1688 of 2015 cycle Nestle India Limited versus FSSAI. Moreover, during the pendency of the suit, pursuant to court orders, samples of Maggi noodles that were manufactured before June 2015, also got tested at CFTRI, the Central Food Technology Research Institute, Mysore. And the test results of all samples tested have found Maggi noodles to be comprised with food regulations and safe. Additionally, as per the honorable Supreme Court order dated 3rd January 2019, that CFTRI test results will form the basis of proceedings for the matter pending before the NCDRC. Thus, given this background, in our current assessment, Ultimately, the class action should not succeed. However, we will continue to monitor the future developments. And if need be, we will review this assessment. As regards to the auditors, there is no qualification or observations or comments in the auditor's report on the position taken by the management.

Thank you, Mr. Murli. Mr. Purkayastha's second question regarding the increasing burden of the company's pension scheme and reasons for not shifting to the defined contribution plan from pensions such as the national pension scheme. I would like to pass on the second question to Mr. McDaniel for his response.

Thank you, Chairman, and thank you, Mr. Purkayastha for the question. Absolutely correct observation. Defined benefit schemes are volatile and can be increasingly expensive over time as the factors that determine the valuation of the obligation move, for example, investment returns, interest rates and indeed mortality assumptions. In 2013, the company closed our scheme to new entrants. So the defined benefit obligation is for employees who are part of the company before that date. After that date, it's a defined contribution scheme with the National Pension scheme. Of course, the company is looking at this as are many other companies globally at how to make these defined benefits schemes less volatile and more manageable, and we will evaluate this going forward. In doing so, of course, we have to make sure that we trust the company, its employees and its shareholders equally. Thank you.

Thank you. Thank you, Mr. McDaniel. I would now go on to the fourth gentleman, Mr. MP Bhutani, client ID #1203000000059427 has thanked the management for conducting the AGM through video conferencing and provide all information in the annual report and at the same for giving good investment returns on the equity shares and also for the dividends. Mr. Bhutani has requested the company to comment on the launch of new products during 2020, and I will take the privilege of answering this question from Mr. Butani. Mr. Butani, in the last 5 years in Nestle India. Our pace of innovation has been almost 3x what it has been in the previous 5 to 10 years. So Nestle India has become a vastly more innovative and agile company in terms of responding to consumer needs and also the consumer journey. In that context, 2020 has also started. Despite the COVID situation, we have launched some new variants of Maggi noodles on e-commerce platforms. As I speak to you, in the new context of the post-COVID world, where immunity, where quality of nutrition, where trust, safety are extremely important to consumers. My team across businesses is recalibrating the innovation platforms that we are adopting. And also the new products that we will be introducing in the coming months and also in 2021. I want to assure you Mr. Bhutani that the company, which has met its significant increases in share value through a combination of steering the course and being on the bedrock of trust, nutrition, quality and safety is also an innovative company that is seeking new frontiers. And these new frontiers are being recalibrated, and you will see the results of your company coming in the subsequent months as well. I thank you for your confidence and look forward to renewing the confidence in the future as well. So I'd like to take this opportunity to thank all the speakers participating from across the country. This has been, as Mr. Venkata Subramaniam rightly said, an enormous opportunity. And as Mr. Srimal said from Kolkata, an enormous opportunity for shareholders to join us wherever they are in the comfort of their homes and to ask us the questions and clarifications that they want their company to address and the suggestions that they've got. So I want to thank our speakers participating from across the country for their comments and questions. I will now proceed to answer the questions raised by the speakers. Now let me repeat take a question either combined in sets or I will address them individually. There was a question from Sakshi Sanjeev Kapur, the first question of the day. Will work from home become a regular feature? I think it's a very good question, Sakshi, that you've asked. Work from home will become in a post-COVID world where we still don't have the cure and we still don't have the vaccine probably a reality for some time to come. So while I do not envisage a company moving completely to work from home, we are still a brick-and-mortar company. We are still a consumer-driven company. We are still a company that has got strong values and a strong purpose. We are still a people-centric company. And for us to move completely into a work from home is not something that I could envisage at this stage. But certainly, we will have work from home in areas where we believe that there is a possibility for our employees to engage in. I'll take the next set of questions, I think, which had come. The first was regarding the split of shares -- suggestions on split of shares, which Ms. [indiscernible] Sam Patel had asked. I think -- and -- this fundamentally -- on the split of shares, I think, madam, the approach that the company takes is in terms of its current equity financing patterns, its needs for the future and its capability to enhance shareholder value as a consequence of splitting the shares. So therefore, I think your suggestions will be taken for due consideration, and we will be able to respond to you subsequently on this. The next set of questions you had was for reason for increase in debt during 2019 and the future plans. I would direct this question, 2, 3, 4, 5 and 8 that you had posed to Mr. David McDaniel for his answer. There is also a question relating to, why is there a decrease in investment in mutual funds, which also I would request Mr. David McDaniel to take on and why the cash has been reduced in the balance sheet and how has this been utilized? Again, a question that I would like to request Mr. David McDaniel to answer.

Thank you, and thanks once again for the questions. I shall do my best to answer. So the first question about the company debt increasing. Actually, we are very little leveraged as a company. We have substantial shareholder funds and very little borrowing overall. There is a small piece of noncurrent borrowing, which, in fact, is a tax incentive from the state of Karnataka, which is an interest-free loan in lieu of VAT payable on goods produced and sold in the state of Karnataka, which is our Nanjangud factory location. This is a new benefit available for 7 years, and it started from -- or it starts from -- payments start from 2021. So that is a small increase in noncurrent borrowings, which I hope is what you are referring to. But overall company debt is absolutely negligible. We are, of course, having good liquidities. Moving on to the question about securities investments and cash balance. I think I can take them together. The decline in cash balances or liquidity is related to the special dividend paid in 2019. So a dividend of INR 180 per share, which was on top of a dividend of, I think, INR 162 per share, let's say, a more normal dividend. So overall dividend outflow in 2019 was substantially increased, which is the sole reason or the very much the major reason for change in liquidities of the company at the end of 2019 compared to the end of 2018.

Thank you. Let me take a few more questions again. One, there is a cautionary statement in Page 25 of the directors' report. And any forward-looking statements also that we do, we normally don't do any forward-looking statements in the directors' reports as far as the performance or the potential of the company is concerned. There has been, of course, suggestions here that have come regarding nonavailability and better availability of products in Mumbai. My apologies, madam, if you have not been able to find all our products on the shelf at all points in time. I think Mumbai has been an especially afflicted city during the COVID pandemic and my prayers for your health and that of your family. And this has led to some disruptions, which we are now very actively seeking remedy steps for it. So you will find the availability situation for us improving dramatically. Our brands are and we are blessed as a company and your company is best to have brands that are asked for at this time. And in fact, the surge on the demand for Maggi has been rather sharp during the pandemic. And my team across factories, and we have 5 out of our 8 factories that manufacture Maggi noodles, they are really hyperactive in terms of trying to ensure that our availability and our supply chain is able to cater to this demand. If you would -- it will hearten you to know that the market share for Maggi noodles actually in the last 1 year has gone up. It's even higher than what it was post the comeback. It is now well over 60%. And I believe that we will go from strength to strength as well. There's one more question here, David, which I would request you to take on board is, in Page 70 of the annual report, loans to employees and advance to employees are indicated. What are the terms and conditions of this?

Yes. Thank you. Loans to employees have a tenure of 36 months. These are small loans provided to members of staff, could be on the occasion of relocating in the country for a new job to help them with short-term expenses, 36 months tenure. Advances to employees are in the main travel advances, mostly for sales force employees.

Thank you. Thank you, David. Will Nestle provide an e-commerce platform for its products? I think, madam, at the moment, we are working very well with e-commerce customers, whether it is Amazon or Flipkart or Big Basket or Gofers or Milkbasket, numerous people we are working with. In fact, we have also opened, as was a suggestion of one of the honorable shareholders of opening platforms with Zomato and with Swiggy and with Dunzo. We have started distribution activities with them. The scale and size is relatively small at the moment. But clearly, we can see traction happening in the e-commerce space. And to really answer the question on e-commerce, which has also appeared subsequently, e-commerce is proving to be a major opportunity for growth. Our contribution of e-commerce has doubled in the last 1 year. We were at about 1.5% of business last year coming from e-commerce. Today, we are approaching 3% of business coming from e-commerce. I think it has become now a destination for shoppers because of the pandemic and because of the infirmities in being able to go across to outlets. But really, I think it's an opportunity. We will calibrate ourselves for this opportunity as best as we can in terms of portfolio, in terms of products, in terms of SKUs in order to capitalize on the opportunity. However, we do not -- at this stage, we are still evaluating whether we need to set up a separate e-commerce platform as a company. But at the moment, we believe that the current route-to-market channels and engagement with e-commerce that we have is fairly adequate to be able to deal with the opportunities for us. I've already -- will take some of the other questions as well. Again, on the availability of Milo in Mumbai. I think Milo has been -- I thank you for your comment, Ms. Patel, on your appreciation for Milo. It is the world's leading chocolate malt drink. There's no 2 ways about it. It is bigger than many of the other players in the market. We are test marketing it in parts of the country, and we will ensure that its availability starts to expand as the results of the brand also start to speak for itself. I'm delighted to tell you that this is a company of purpose, values and heritage. We still have some of our old brands. And I think Farine Lactee, that was the first product that was made by Henri Nestle, still exists and it's called Cerelac. So therefore, that is to tell you that the product has been robust and the product has remained viable and efficacious in all these years. We have -- at the moment, we have been a Gurgaon-based and a Delhi NCR-based company for decades now. And as of now, we really don't have any plans to shift our office. But however, these are aspects that get constantly evaluated. But at the moment, there are no plans to shift to Mumbai. We talked about the 400 kiosks in the annual report. These are kiosks that in a very hygienic, in a very efficient, in a very efficacious and in a very quick manner, address the portfolio of the company that the millennials and the Generation Z can access either in the educational institution or indeed in areas of high traffic. So we have some of these kiosks now across the country in some of the airports. We have it in educational institutions. In some of the leading educational institutions in Mumbai as well, we have the stall. If you visit St. Xavier's College, for example, there is a Maggi kiosk there that is catering to students of the college. Also, madam, for me, I look at it as a great opportunity for Nestle to create employment. I think entrepreneurship is something that we need to encourage in a post-COVID world. And I'm really looking at thrust around kiosks that can generate honest, decent and also sustainable living standards for young people and also it can generate jobs. 400 outlets that we have got at the moment is creating almost 1,000 jobs. And I think these are decent jobs. These are respectable jobs. And I think it will be something in the interest of the country that also we would like to pursue as we go forward. The next set of questions is on CapEx plans. Yes, as you might have already read, we have a plan to put up our ninth factory in Sanand in Gujarat. This is a factory that will come up with an investment of INR 700 crores or more. This is currently in the stage of civil construction work. Unfortunately, that has been impeded because of the labor situation post COVID. We are confident that my team would be able to put the plant back or put the construction activity back in a couple of weeks. But nevertheless, there has been a delay as far as this plant is concerned. I believe that it will be a state-of-the-art factory. It will be one of the best factories that we have in the Nestle world. It will be a digitized factory. It will be a factory where I hope we achieve our dream, and that's a firm dream that I personally have as also the head of this company of having 50% of people who are women who work there. It will be a signature factory of the Nestle global standards of food quality and safety. And I think it is something that we will look forward to in the post-COVID world as well. There have been questions here on margin increases. I think our margins, if you look at our annual report, have increased fairly handsomely. I mean, last year, the operating margin closed at 21%. And I think the objective of the organization, and since this is not the purpose of giving any forward statements to you, which we don't as a company, I think a sustainable growth and profitable model -- sustained growth with sustained profitability has always remained the model of the company. In the recent past, we have accelerated penetration, accelerated the focus on volume growth. And I think we have been able to, for the last 10 quarters, enjoy a fairly strong volume growth and value growth. And in the first quarter of 2020, the January to March quarter, we were amongst the very, very few companies to actually record a double-digit growth in both top line and also in bottom line. So we will be on that journey, but it is a journey that can have its ups and downs depending on the overall situation of demand, commodity costs and other considerations that can come into play. Some of the other questions that have been asked. Yes, I think one of my esteemed shareholders, the gentleman from Delhi, had asked about diabetics and products for diabetics. I think we have the following products that are suitable for diabetics in our current portfolio. Nestle Health Science, which is our range of health science, high-quality, very efficacious and proven products have some low GI products. RESOURCE Diabetic, which is a protein supplement and Nestle Optifast for those who have issues around managing their weight and obesity. Nestle Optifast is a proven solution for weight management through dietary means and through -- honestly, through efficacious means. In dairy, we have got low-fat dairy, Slim Milk and Dahi and A+ range. Actiplus Dahi, Jeera Raita are all products that can be consumed by diabetics. Coffee, we have pure coffee and coffee chicory mixtures, Nescafe, Nescafe Sunrise, Nescafe Gold are all products that can be consumed by diabetics. In our prepared foods, we have seasonings such as Masala-Ae-Magic and cubes that are also capable of being consumed by diabetics. Of course, each of these products, you might like to consult your doctor before you finally use them. But it is a very good question that has been asked, and I thank the shareholder for his suggestions. We will be actively looking at expanding into the diabetic space to see how we can provide more products in our range that can be suitable for diabetics over a period of time. There have been questions here on milks and nutrition. I think we've answered this question regarding how we want to proceed it in the post-COVID world. I honestly see a lot of opportunities that we have in the milks and nutrition area through better innovation, through accessing rural markets. You will be happy to know, dear shareholders, that the growth of the company in the last 10 quarters, a good part of the growth has come from Tier 2 and Tier 3 towns. So it is telling you today that semi-urban India and rural India is receptive to Nestle brands and to the fact that good quality, good safe nutrition is important. And I think that's the opportunity that we look at. I think there has been a question on acquisitions. I think it's a very good question. As a company, we keep our eyes and ears open on opportunities either in categories that we are in or in adjacent categories. The ambition is to grow. And like a banyan tree, as I said, to also involve a greater part of society and the community in what we are doing. So the acquisition opportunities will always be kept in mind as we go forward. Right. The next question is, there has been, of course, suggestions around setting up a fund for organized and unorganized sector during COVID. I think I would like to inform the honorable shareholder that we have already committed to a sum of INR 15 crores as part of CSR contribution to deal with specific issues with the community and supporting the community. I think we have had an outreach program that has been extensive. It has been with feeding programs, with provision of ventilators and PPE equipment, of engaging with small retailers, protecting their incomes. MSMEs, your company works with numerous MSMEs across the board, whether it is packaging suppliers or whether it is suppliers of small ingredients. I think all of them, we have tried to ensure that they survive, they are protected either through advanced orders or through prompt payments or through advanced payments, through help in getting permissions. We have set up and we are doing extensively, and you'll be very happy to know, dear shareholders, that we are having extensive training programs that is conducted by Nestle with our suppliers on social distancing, on safety measures, on hygiene measures that can be run in their factories. And I think since we are a company that prides itself in compliance and in safety, and we have a 150-year-plus record of this, we want to help. And I think that help is more than welcome by our vendors as well. I think I go on to it. Subsequently -- yes, there are questions here regarding during COVID and post-COVID, how are we ensuring continuous supply of our essential food products. I'm delighted to inform you that your company has all its 8 factories fully operational today. As I speak to you, we are upwards of 80% of capacities. Our distribution centers are operational. Almost 95% of our distributors are operational. Our frontline field force, distributor salespeople, majority of them are coming for work. And I think we are in a much better situation today than what we would have been about 6, 8 weeks ago. So the initial trauma of the lockdown has, in some sense, been mitigated by a series of helps. And that's where I would also like to thank the local authorities for helping us with the necessary permissions. And this is where credibility and trust of a company matters. And I think Nestle is blessed not just with shareholders who are trusting but also with an environment that is receptive at this time. So we are well on the path to ensure that most of our essential products are made available, and we are ramping up consistently every single day. I think the opportunity in rural India continues to be strong. Nestle has a portfolio across the board. And I think as one of our shareholders, Mr. Chopra, has said today, you go to a small village and you will find Maggi noodles there. So I think parts of our portfolio also are reaching out to rural India, and we will be looking at expanding quite aggressively into rural opportunities as well. There's a question on companies like ITC, Marico introducing new product ranges like sanitizers, et cetera. Nestle India is a nutrition, health and wellness company. We are a food and beverage company. We are a company that does not deal in any other categories like sanitizers or soaps or detergents or personal care or any of these. We are focused for 154 years on food. And I think we will stay in that space. There are numerous opportunities that the company sees, whether it is in immunity products, better nutrition products, more convenient products, more efficacious products, products addressing specific health needs and health requirements. We talked about diabetics, and we talked about people who have weight management issues. Similar kind of products are also there for people with kidney-related issues. We have a resource for dialysis as well. So therefore, there are a number of opportunities that the company has. And as I've said many times before, the challenge for Nestle is not what to launch, but when to launch. We do not have a shortage in terms of our innovation capabilities, and that is because of the core strength of the parent. The name Nestle comes with more than Nestle. The product, the R&D, the fact that we invest $1.5 billion every year in 31 R&D centers with 4,000 scientists, the fruits of that comes to this company. The brands also belong to Nestle and it comes to this company. So the company has been an enormous beneficiary of science, of technology, of R&D, of new developments and also of technical support. All our factories, all 8 factories and the ninth factory we are putting up are world-class factories. These are gold standard factories. There is nothing called an Indian factory and a Japanese factory or a Malaysian factory. There is one single Nestle factory set to a Nestle global standard. I think there is a power of integrity, of trust and of ethics in this business that is very, very strong. We live by it, and we swear by it. And I think that is really what we will be putting forward in all the initiatives that we do in the future as well. I have answered the question on e-commerce. I shall not repeat it again. Nescafe Gold performance, I think I mentioned about it. Premiumization is clearly there in this country. During the pandemic, there has been a greater engagement with brands because brands have moved from out-of-home to in-home consumption. And some of our brands, whether it is Maggi, Nescafe, KitKat, Everyday, Milkmaid, Masala-Ae-Magic, Maggi, the whole lot of them have all got a very, very sound foothold as far as in-home consumption is concerned, and we are seeing upticks in Nescafe Gold as well. There is a suggestion here on Nescafe ready-to-drink coffee cans. I think this was given by our shareholder from Indore. You'll be happy to know, sir, that Nescafe cans have been launched in the market. And I think over a period of time, now you will see greater focus on this. They have been put a lot into the out-of-home channels. But I think now is when we are getting more of in-home opportunities, and we will recalibrate this in the coming months, in the coming period. I thank you for your suggestion because I think it's important that we look at it in that perspective. Then there are a few other specific questions that I would like to take. I think some of them were given by Mr. Srimal. Yes, there is a dividend of INR 342 for 2019. Is it likely to be maintained in 2020? I think Mr. Srimal, while your blessings are extremely important, I would like to clarify that the INR 342 includes the special dividend also that was paid. And I think that is important. Before I take on any more -- I answer any more questions, I understand Ms. [indiscernible] is now ready to connect by phone. So therefore, I would not like her to be the only shareholder who could not connect at this meeting. So may I request her to please connect on phone.

Sir, she is connected. Ms. [indiscernible], you may go ahead.

I am Mr. [indiscernible]. I would like to ask you that for 2020, you have declared interim dividend of INR 660, that you clarify. Sir, Ms. [indiscernible] would also like to ask a question.

Okay, she has the same question?

Yes. One is the same question. Yes. And second thing is that during the lockdown, the Maggi products were in great demand. I'm speaking from Bombay and South Bombay, Maggi products were in great demand, but they were in great shortage. Everybody wanted your products. Now another thing I want to know, could you make -- which product of yours was very much sold during lockdown because biscuits and newspapers were in short supply and Parle biscuit company, ITC biscuit company made massive- huge revenue during the lockdown, which was a record sale. I want to know, did you make any such record sale during lockdown? And you could not send Maggi products to South Bombay. Of course, in Chairman speech, I got a complete idea of the logistics and the difficulty in distributing your products over to many places. But you can get the police permission as it is an essential services, it comes under Essential Services Act. You could get police permission and dispatch your products and distribute your products all over. Sir, it's a very cumbersome process, yes. So we would like to get answers to these question. Yes. One [indiscernible] also, were your companies working, I just want to know because they come under Essential Services Act.

Thank you, Ms. [indiscernible] and thank you, Mr. [indiscernible], for your questions. I think I will take the second part of Ms. [indiscernible] question. Yes, madam, it is true that Maggi noodles had, had a very sudden surge in demand, but a surge in demand that was completely unexpected during the situation. So obviously, we took some time in being able to cater to it. Our factories initially for the first few days, it was like a shock because everything came to a grinding halt and also interpretation of what is essential. So madam, I'm happy to hear that you call all our products are essential. But at that stage, some people were taking interpretation that only baby food is essential or only milk is essential and everything else is nonessential. So therefore, this interpretation also had to be clarified where the government helped a lot in clarifying it. And now I think we've got the relevant permission. So most of our brands, I think our brands around milks and nutrition, our brands in prepared dishes, our brands in coffee, our brands in chocolate confectionery, all of them had strong demand and continue to have good demand. So therefore, that, madam, is the good fortune of your company in this pandemic. Now there is a question from Mr. [indiscernible] on declaring an interim dividend of INR 660. So can I just request Mr. David McDaniel to kindly clarify this?

Yes. I'm not sure where the question is coming from exactly, but we have not declared an interim dividend in this year. At the moment, we have taken a prudent -- no, we have not. We've taken a prudent approach because, of course, the COVID situation brings with us a lot of uncertainty and a lot of business disruption and economic disruption to the country. So we have not declared an interim dividend yet.

Thank you, Mr. and Mrs [indiscernible]. Thank you for your questions. I will just go and answer now the -- I will take on the other questions. I think Mr. Srimal had quite a few suggestions, which we will take on board, and we will look at it. I think you wanted a short profile of the Board of Directors. It's available, Mr. Srimal, on the website of the company. You asked it to be incorporated into the annual report. I think we will take the suggestion, and we'll see what we can do about it. Holding the AGM earlier by end March, your request is noted. Ironically, Mr. Srimal, our original date planned was the 8th of May, which unfortunately, we had to postpone because of the pandemic and have it in the video format once the Department of Company Affairs and SEBI gave the necessary notifications. The next set of questions that are there are around stability in the business. Okay. I think a specific reference made to breakfast cereals business. I think breakfast cereals has gone off to a very good start. We have today 2 brands, Koko Krunch and NesPlus that are part of the portfolio. We have had an encouraging response. And I think we will build on this as we progress. And this is one of the pillars of growth that we clearly see. Breakfast is the most important meal for human beings. I mean the fact is that more than 1/4 of people skip breakfast, but you are skipping the most important meal of the day. So you need to have literally a heavy breakfast, middle lunch and a very light dinner. And more often than not, we have very light breakfast, heavy lunch and a heavier dinner. So we go in the opposite way in the sense of what nutrition and what digestion looks for in human beings. So therefore, this is an important part of our portfolio, breakfast cereals, and you will see renewed aggression in this as we go forward. Next set of questions. Yes, there is a question on measures to bridge the gap between foreign exchange inflow and outflow. I think it has been answered -- question has been answered by our CFO, Mr. David McDaniel. I think some of the impact has been because of reduced earnings on exports to Turkey. I think every effort is being made to look at India as a source for supplies, especially for ethnic-related foods to different parts of the world. I also want to emphasize that what we sell in India, 99% is made in India, 99%. So therefore, this statement or this thought that you might have that we import a lot of our products in untrue. These are all products made in Indian factories, by Indian workers, supplies being made by Indian farmers, sales and trade being entirely Indian, materials, raw materials sourced entirely locally in order to produce and sell these products. Therefore, when I said in my speech, we are a make in India and made for India. Both of these apply. Our Maggi noodles, which you all are so fond of as shareholders of the company, is unique to India. This Maggi Masala is a unique Maggi Masala that you don't have it in any other part of the world. And I think that is the strength of the company to bring science and technology and the capabilities to be able to customize products into the context of the country as well. Yes. The suggestion is there, I think on, the balance sheet should be signed by all the directors. In fact, the balance sheet is approved by the Board, I think which is a strong enough criteria that we are using. And nevertheless, your suggestion would be kept with us, and we'll see what we can do about it in the future. Right. I think questions here have come on the communication tab from Mr. [indiscernible] that why not allowed to speak at the AGM. Sir, with all due respects, I think we, at the start of the AGM, had given 3 routes by which to connect with us, either you have preregistered or you have sent your questions on e-mail or indeed, you have connected through the communication tab, which is what you have done. So within technology, I'm afraid what is permissible and what could be done are really the 3 options that you have had. Unfortunately, this is not a physical meeting. Otherwise, the situation might have been different. Availability of KitKat and Munch, I think as I covered earlier, sir, there has been a disruption. But I'm happy to say that as I speak to you, the disruption is getting much better, and we are in a much better situation to be able to supply our products as well. A request has been made by Mr. Ashok Kumar Jain on a factory visit. Well, typically, we do not have any scheme for arranging factory visits. But in case you happen to be at any of the locations where our factory is situated, we would be happy to arrange for your visit. Of course, please ensure to intimate us in advance to enable us to confirm your visits. But in the current context, sir, of the COVID situation, we do not, at the moment, encourage any factory visits. In fact, we are discouraging any additional footfall at our factories because of the pandemic and because of the need to secure the manufacturing locations. So my apologies, if you are visiting a site and you want a factory visit at this time, it will be very difficult for us to organize for it. Mr. Vishwanathan has asked questions on Maggi not being available at DMart many times. Sir, it could be a combination of 2 things. One could be that the level of demand is so high that the replenishment is not quick enough. Sometimes that is the issue. Sometimes because of the pandemic, there have been infirmities in terms of supplies and our capability to supply this in time, and that's probably one of the reasons why you have not been able to find it as frequently. I think I've addressed the issue on splitting the shares, and therefore, I shall not repeat the answer again. A question from Rita Jain. How much royalty payment has been made by the company? And can you explain the arm's length principle with the Nestle parent? I would request Mr. David McDaniel to kindly address this question.

Thank you. The royalty payment in 2019 was at the same percentage level as 2018, which is 4.5% of sales net. And the increase in royalty, as I explained earlier, was entirely due to the increase in the sales of the company. So the royalty payment cash increases absolutely in line with the sales of the company. The royalty rate itself, the 4.5% is validated by a number of exercises that have been done locally with BSM and KPMG, for example, who look at the range of royalty payments made by other competitor companies or other MNCs, and they come out with ranges between 5% and 9%. So actually, we are on the lower end of the range. Our GLA is also -- our royalty payment is also on the lower end of what is paid by Nestle subsidiaries around the world, and it's in line with the guidelines of the government, which is 5% on domestic sales. So our royalty percentage is absolutely justified and well supported by local exercises as well as the government of India. Thank you.

Thank you. Thank you, David. Let me take on a few more questions that have also come. There's a suggestion here from Ms. Janaki Krishnan for launching innovative and immunity boosting coffee and tea with natural and herbal ingredients. Thank you, madam, for your suggestion. I think we have got Nestea, which is one of our products. And also, we export instant tea as well, which is used in many innovative products. We will certainly look at how we can leverage it in the context of India as well. There's a suggestion from Mr. Lokesh Gupta. He says, while we have the VC meeting because of COVID, but please, from next year, continue the in-person meeting so that shareholders get the chance to meet the management. I think, sir, we'll cross the bridge as we come to it. But yes, I do recall with fondness the meetings I've had with shareholders at least for the last 4 times when I have met in person. But we will have to take it as the situation evolves and see how we will do the next year Annual General Meeting. There's a question here from Mr. [indiscernible] Singh on thanking the company for bringing back Milo and when will the Milo available in South Delhi stores? I think the distribution, sir, has already started. Maybe there is an issue here in terms of reaching your particular store, and I'll be happy to address this as well. But clearly, as I said, we are test marketing it. It's not in a full-fledged kind of format across the country, but we will be accelerating it depending on the impact that it gets in the marketplace. Right. I think there's a question here from Mr. Rajendran on appreciating the management and the high share price and the high dividend payment. Thank you, sir, for your kind words. Why have exports dropped? I think, sir, the primary reason for exports coming down has -- in fact, there has been a growth in many parts of our portfolio, nutrition [indiscernible] in terms of prepared foods and also in terms of chocolate and confectionery, we have actually grown. The area where we have really had an impact is the coffee exports to Turkey. That has been because of a realignment and because of a duty arbitrage that favors the company to import the product from Europe. So that's the only reason, but the team is active to try and make up for some of this in the coming years. And I think I'm reasonably confident that we will get there by and by. Right. This is a kind of anonymous question really. The name has been left blank, but the ID number is IN302902. In COVID times, how are we connecting with the customer and general sales? I think our distribution activities are on in the full measure. And I think we -- as I mentioned to you, more than 90% of our distributors are operational. And therefore, we are able to get the product reach gradually expanded during this period. I think the question is how do you launch products which are value accretive and discretionary in nature and market them [indiscernible] sacrificing on. I think, sir, the strategy that we follow is launch first products that the consumer has a perceived need or where we have got something that is superior to offer. Pricing and margins come only after that. I think when you buy a product as a consumer, you want to know whether this product will do something good for me. Will it be beneficial? Is it offering the right kind of price value? And is there something -- is it at the right kind of price that I'm willing to pay? So those are the considerations. I think our company is blessed with a strong portfolio, but we never look at making a certain margin and then launching a particular product. It is how does the product work, what is the integrity of the product and how does it affect our consumers in a positive way. Price increases in baby food consecutively to a tune of 3% to 4%. Can we expect higher value-led growth in the coming quarters? Look, honestly, there has been no price increase at all during the COVID period. So I would really like to categorically say these price increases are not made opportunistically. Price increases are made if there is a commodity headwind that is severe and that it's not capable of being mitigated by the company, either by better efficiency, by better economies of scale or by better and more efficacious manufacturing. Only in those situations, our price increase has taken. So I want to be very, very categoric with you that there have been no increases specifically during COVID times. if and when there are price increases planned which are because of circumstances that are completely unavoidable, it is only then that we will look at price increases. As of now, there is no plan that the company has. There's a question here from IN30205 on, since we have moved into unlock mode, would like to know the current capacity utilization of our products, the range of products, I'm not [indiscernible] specifically the breakfast range. I believe that the breakfast cereals, again, has been launched in about the top 40 to 50 towns. We really haven't gone below that. We were rolling out when the whole COVID pandemic happened. And therefore, we have been kind of stopped in our tracks in terms of expanding it. So we will expand it as and when the markets open up. As I told you, we are upwards of 80% on the manufacturing capacity at the moment. And I think most parts of the infrastructure are working quite well. How our R&D facilities going on? When will we have a ready-to-consume snack item who do not require cooking, right? I think we constantly work on product ideas. I think the strength, as I mentioned, the bedrock of our company is on R&D, on science, technology and nutrition. All our products are the children of these initiatives. And clearly, we will be focusing on them quite strongly in the coming post-COVID world as well. And indeed, there is a lot of area on -- the healthy snacking area that the company also is looking at. And this is where the support that we get from Nestle under the general licensing agreement is so critical and so important for your company to be able to come out with these kind of products. I think with this dear shareholders, I have kind of completed all the questions that had been asked to the best of my knowledge and belief and also to the best of my capabilities. We have tried to answer your questions to the best extent possible. If any of your questions has not been answered, please write to the designated investor e-mail of the company, which is [email protected]. I repeat [email protected], and we shall respond to you within a week's time. Now for voting on the agenda items 1 to 7 as set out in the notice of the AGM. As explained earlier, members present at the AGM, but who have not cast their votes by availing the remote e-voting facility can exercise their vote in proportion to their shareholding through electronic voting platform provided by NSDL, the icon of which is available on the top of your screen. You will be redirected to the e-voting portal of NSDL. Mr. Abhinav Khosla, Messrs SCV & Company LLP, Chartered Accountants, will scrutinize the votes cast through remote e-voting and votes cast during the AGM on e-voting platform as provided by NSDL. Mr. Khosla will submit the report thereon to me as the Chairman in the prescribed manner not later than 2:00 p.m. tomorrow. The voting results on all the resolutions placed before the AGM would be declared not later than around 6:00 p.m. tomorrow and shall be immediately intimated to the Bombay Stock Exchange. The results, along with the report of the scrutinizer, shall be uploaded on the website of the company and the NSDL and shall be also available at the registered office of the company. I now wish to draw the attention of all the members participating in the AGM that the e-voting platform provided by NSDL will remain open for another 30 minutes, 3-0 minutes. I thank you all for your participation, for your valuable suggestions and comments, which I assure you will receive due consideration of the management. The proceedings of the meeting will close after all the members participating in the meeting have cast their votes through e-voting, which will lapse after 30 minutes, which is 3-0 minutes. Thank you all. Best of luck to all of you. May good health and happiness always be with you. Thank you. [Voting]

Dear members, as advised by the scrutinizers, the time for e-voting has elapsed, and we are of the opinion that all the members who are participating in the Annual General Meeting have been given adequate time and opportunity to vote at the AGM, and this concludes the voting process of AGM. I hand it over back to the Chairman. Sir, you may go ahead.

Thank you. Thank you, Diksha. The eligible and willing members have been given adequate time and opportunity to cast their votes. I formally close the proceedings of the meeting, but not before sincerely thanking and expressing my gratitude to each one of you, dear shareholders, for your participation in the Annual General Meeting of your company, for your questions, for your words of praise, for your different suggestions and for your outlook of goodwill and of the future prosperity of your company. I take the opportunity to wish you all the very best, the best of health. Stay safe and secure in your homes during this pandemic. And I do hope that we can meet someday when the clouds are clear and when we are in a much better shape as a country and as a world. Once again, thank you very much and best of luck to each of you. Thank you.