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C o m p

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National Foods LimitedWebsite: nfoods.com

Annual Report 2014


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Organizational ChartDirectors’ ProleHead of DepartmentsCEO’s MessageManagement ReviewSustainability InitiativesDirectors’ ReportFinancial RatiosHorizontal AnalysisVertical AnalysisSummary of Six-Year Cash FlowsStatement of Value Added and its DistributionPattern of ShareholdingStatement of Compliance with the Code of Corporate GovernanceReview Report on Compliance with the Code of Corporate Governance

Financial StatementsConsolidated Financial StatementsNotice of Annual General MeetingGlossaryForm of Proxy

Contents

Our Story

Business Prole

Geographical Presence

Founders’ Philosophy

Vision & Mission

Core Values

Code of Ethics & Business Practices

Company Information

Calendar of Major Events

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Our StoryNational Foods Limited (NFL), founded in 1970, is Pakistan’s leading Multi Category FoodCompany with over 250 different products in 12 categories. NFL holds ISO 9001, ISO22000 and HACCP certications along with SAP business technology to drive its strongcommitment to quality and management excellence.

NFL is an international brand sold in over 45 countries and aims to become a Rs. 50 billioncompany under its 20/20 vision.

NFL is dedicated to improving the well-being of society not only through the continuousdevelopment of innovative food products but also by means of its wide rangingcorporate social responsibility programs.


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Geographical PresenceBusiness Prole

Available Countries

Head Office

NFL had successfully established itself as a multinational company with an independent subsidiary, National FoodsDMCC, in Dubai last year, catering to the Middle Eastern market. We have now further expanded this structure withsubsidiaries in Canada, (National Epicure Limited) and United Kingdom, (National Foods Pakistan UK Limited) cateringto the North American and European mar kets respectively. We have also appointed a Regional Representative at eachof these offices, ensuring that the focus remains on these specic high potential regions.

With already existent exports to over 45 countries, NFL has recently expanded its global footprint by tapping into newermarkets including Bangladesh, Nigeria, Iraq, Netherlands and Japan. Our products have been sent in these regions forthe rst time.

NFL worked towards the optimization of its distribution network, rationalizing underperforming distributors,appointment of additional distributors and addition of new markets. Similarly, in order to provide better coverage andavailability in the UK region, an additional distributor has been appointed. All these efforts were aimed at furtherexpanding our presence around the world.

UAENational Foods

DMCC

National FoodsCanada Ofce

and Hub

National FoodsUK Ofce

National Foods Limited


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08

Founders’Philosophy

N a t io n a l Fo

od s m u s t foc u s o n c u

s to me r s need s a nd

se r ve t he m w i t h q u a l i t

y p rod uc t s a t a ffo rd a b

le p r ice s.

O u r p rod uc

t s m u s t be p u re a nd s h

o u ld co n fo r m to

i n te r n a t io n a l s t a nd a rd

s.

O u r re se a rc h m u s t co n

t i n uo u s l y p rod uce ne w

a nd

ad ve n t u ro u s p rod uc t s

t h a t a re sc ie n t i c a l l y

te s ted a nd

h yg ie n ic a l l y w r a p ped

i n s a fe a nd a t t r ac t i ve p

ac k ag i ng.

We m u s t c re a t

e a n e n v i ro n me n t i n o

u r o ffice s a nd

f ac to r ie s w he re t a le n t i s g roo

med a nd peo p le h a ve

e ve r y

o p po r t u n i t y to ad v a n

ce i n t he i r c a ree r s.

We m u s t p ro

ve o u r se l ve s to be goo

d co r po r a te c i t i ze n s,

s u p po r t c h a r i t a b le c a u

se s a nd be a r o u r f a i r s

h a re o f t a xe s.

Re se r ve s m

u s t be b u i l t, ne w f ac to

r ie s c re a ted, so u nd

p ro t s m ade a nd f a i r d

i v ide nd s ho u ld be p a id

to o u r

s toc k ho lde r s.

T h ro ug h b u

i ld i ng a re l i a b le b r a nd

N a t io n a l Food s L td.

m u s t ge t i t se l f recog n

i zed a s a le ade r i n P a k

i s t a n a nd a b ro ad.

W i t h t he he

l p o f A l m ig h t y God, t h

e co m p a n y c a n

ac h ie ve i t s t a rge t s i n

t i me s to co me.


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Vision &Mission

Statement

“Our vision is to be a Rs. 50 billionfood company by the year 2020 inthe convenience food segment bylaunching products and servicesin the domestic and internationalmarkets that enhance lifestyleand value for our customersthrough management excellenceat all levels.”


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Core Values

We act with intense positive energy and are not afraid to takerisks. We challenge ourselves continuously, we’re good at whatwe do, and we take pride in who we are.

We put our people rst. We treat them with respect and activelycontribute towards their development.

We see the world through the eyes of our customers. We doeverything possible to make them happy.

We are part of the solution, never the problem. We act likeowners and have a positive inuence on others.

Our roles are dened, not our responsibilities. We believe ingoing the extra mile to accomplish our goals. We coach andsupport each other to ensure everyone wins. We have a “WEversus I”mindset.

We don’t run our business at the cost of human or ethical values.

We say. We do. We deliver. We talk with our actions. We strive fornothing but the best. Execution is the key to winning!

We see. We act. We take full responsibility of our actions andresults. We don’t blame others for our mistakes; we analyzethem and correct them.

Passion

People-Centric

Customer Focus

Leadership

Teamwork

Ethics

Excellence in Execution

Accountability


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Company Information

Board of Directors

Mr. Abdul Majeed Chairman

Mr. Abrar Hasan Chief Executive OfficerMr. Waqar Hasan DirectorMr. Khawaja Munir Mashooqullah DirectorMr. Zahid Majeed DirectorMr. Ebrahim Qassim DirectorMr. Iqbal Alimohamed Director

Audit Committee

Mr. Khawaja Munir Mashooqullah ChairmanMr. Abdul Majeed MemberMr. Zahid Majeed MemberMr. Ebrahim Qassim MemberMr. Iqbal Alimohamed Member

Human Resource and Remuneration Committee

Mr. Khawaja Munir Mashooqullah ChairmanMr. Zahid Majeed Member

Mr. Abdul Majeed MemberMr. Ebrahim Qassim MemberMr. Iqbal Alimohamed Member

Chief Financial OfficerMr. Raq ul Islam

Company Secretary Mr. Farhan Latif

Head of Internal Audit and Secretary Audit CommitteeMr. Shahid Hussain

Internal AuditorsMessrs. Ernst & Young Ford Rhodes Sidat Hyder & Co. Chartered Accountants

Company ManagementMr. Abrar Hasan Chief Executive OfficerMr. Shakaib Arif Chief Operating OfficerMr. Raq ul Islam Chief Financial OfficerMr. Kamal Baig Chief Operating Officer-International DivisionMr. Adnan Malik Chief Commercial Officer-Local DivisionMs. Saira A. Khan General Manager-HR, Admin & IR

Auditors

Messers. A.F. Ferguson & Co. Chartered Accountants, State Life Building,

1-C, I.I. Chundrigar Road, Karachi

Share Registration Office

Central Depository Company of Pakistan Limited CDC House, 99-B, Block ‘B’, S.M.C.H.S., Main

Shahra-e-Faisal, Karachi-74400 Tel: (92-21) 111-111-500 Fax: (92-21) 34326031

Principal Bankers

Bank Al-Habib Limited Main Branch, Karachi. S.I.T.E. Branch, Karachi

New Garden Town Branch, LahoreBank Al Falah Limited (Islamic Banking Group) Port Qasim Authority Branch, KarachiBankIslami Pakistan Limited S.I.T.E. Branch, Karachi

Dubai Islamic Bank Pakistan Limited Clifton Branch, KarachiFaysal Bank Limited 16, Abdullah Haroon Road, KarachiNational Bank of Pakistan PNSC Building Branch, KarachiHabib Bank Limited S.I.T.E. Branch, KarachiHabib Metropolitan Bank Limited Main Branch, KarachiMCB Bank Limited Shaheen Complex Branch, KarachiMeezan Bank Limited M.T. Khan Road Branch, KarachiStandard Chartered Bank (Pakistan) Limited Main Branch, KarachiUnited Bank Limited Main Branch, Karachi REGISTERED OFFICE 12/CL-6 Claremont Road, Civil Lines, Karachi 75530 P.O. Box No. 15509 Phone: (92-21) 35662687, 35670540, 35670585, 35670793 & 35672268 Fax: (92-21) 35684870 SITE PLANT F-160/ C, F-133, S.I.T.E., Karachi. Landline # 021-3257-7707 – 10 Fax # 021-3257-2217

E-Mail Address: [email protected] PORT QASIM PLANT A-13, North Western

Industrial Zone, Bin Qasim, Karachi Landline # 021-3475-0373 – 7 MURIDKE PLANT 5-A/1, New Muslim Town, Lahore Factory Address: G.T. Road, Manooabad Meer

Muridke. Landline # 042-798-1427, 798-0808 Fax # 042-798-1427, 798-0808 WEB PRESENCE: Updated company information and the latest Annual Report can be accessed at: www.nfoods.com


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Calendar of Major Events Organizational Chart

July 2013

August 2013

September 2013

October 2013

November 2013

December 2013

January 2014

February 2014

March 2014

April 2014

May 2014

June 2014

• Launch of National Ketchup Zaroori – TVC;• Allergen Battle Program Kick off;

• Inauguration of NFL’s 3rd in-house clinic, Muridke;• NFL Premier League;

• Launch of the Rural Marketing Drive – Asli Te Khalis;• Allergen Management Training for Stakeholders;

• Victory at Brand Elections 2013;• Launch of Humaray Khanay Humara Pyaar (Wedding Campaign) - TVC;• Allergen Control - Virtual War Kickoff;

• Installation of Rotoplex, Universal Pin Mill and Zig Zag Classi cation System - Port Qasim;• Initiation of SPICE competency trainings - CSI;• NFL participates in IIFT- India International Trade Fair;• NFL participates in ANUGA Germany;

• Implementation of Online Salary Transfer System;• Initiation of Extrusion Plant - Port Qasim;• SPICE Training - Strategic Thinker;

• Annual Hajj Ballot & Annual Lunch;• Launch of Made Easy Season 2;• SPICE Training - Partner in Success;

• Ground Breaking Ceremony at the NFL Corporate Office;• NFL participates in Gulf Foods;• Official Inauguration Ceremony of NF DMCC in Dubai;• Soft launch of Human Resources Manual of Policies and Procedures;• SPICE Training - Innovation;

• NFL becomes an ACA authorized Training Employer by ICAEW;• Launch of the 1st phase of NFL’s strategic restructuring;• SPICE Training - Customer Orientation;

• Launch of NFL’s 1st ever 3D advertisement ‘Humaray Khanay Humara Pyaar’;• Allergen Management Program - Final Washout;• SPICE Training - Entrepreneurial Spirit;

• Revamped the Purchase to Payment (P2P) system• Launch of Saaf Paani Sehatmand Zindagi CSR initiative

• Launch of Masala Snax• Launch of National Authentics• Victory at the PAS 2014 Awards for 3 categories• OD team represents NFL at the Annual Learning Conference;

• Performance Appraisal System revamped;

Events & Launches

BOARDOF DIRECTORS

HUMAN RESOURCES& REMUNERATION

COMMITTEE

AUDITCOMMITTEE

INTERNALAUDIT

COMPANYSECRETARY

QRD HR LEGAL

CCO COO-INTL DIV

INTL DIV

COO FINANCE

I.T

SALES TRADEMARKETING

MARKETING

SITE NOORIABAD PQ M UR ID KE S UP PLY C HA IN PROJECTS

CEO


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Directors’ Prole

Today, in addition to playing a vital role in the establishment of National Foods Limited as a leading food company inPakistan, he is also the Chancellor of Textile Institute of Pakistan and Member of the Board of Governors of National Textile University, Faisalabad.

Mr. Abdul Majeed has served as a member of the Federal Textile Board and the Engineering Development Board,Government of Pakistan.

His experiences have been diverse from the very beginning, adding to the depth of what he offers as a key leader atNational Foods Limited. After graduating from the F.C. College, ( a Ch artered University) Lahore with a B.Sc. in Physicsand Mathematics, he was selected by the British Council for Higher Studies in Textile Engineering and completed aB.Sc. (Hons.) in Technology from Manchester University in 1959.

He is keenly interested in innovation and is pivotal in leading the R&D team at NFL. His other interests and affiliationsrange from serving in the Rotary District 3270 in different capacities as well as being active on social forums. He is the

Vice President Alumni Association of F.C. College, Lahore, (A Chartered University). Mr. Abdul Majeed is a FormerBoard Member of Pakistan Institute of M anagement, Karachi and the Society for the promotion of Arabic, Karachi.

He is a life member of the Arts Council, Karachi and a professional member of World Future Society, Bathesda, USA,along with being a Member of the International Geosynthetic Society, based in USA. Mr. Abdul Majeed is a believerin cultural progression and community development.

Mr. Abdul MajeedChairman

Mr. Abdul Majeed is Founder, Director andChairman of National Foods Limited andAssociated Textile Consultants (Pvt.) Ltd. Heis also the Chairman of Nazaria-e-Pakistan

Trust, Sindh – a chapter of its counterpart inLahore.

Mr. Abrar Hasan has been with National Foods since 1993. During hisassociation with the company he has successfully spearheaded theorganization to its present position. Mr. Hasan has used his prociencyin Operations Management, Marketing and Finance with diligence tomake National Foods what it is today - one of the largest and mostsuccessfully innovative food businesses in Pakistan.

Mr. Abrar Hasan graduated with a BS in Industrial Management and aminor in Industrial Engineering from Purdue University, Indiana, USA.In 1990 he returned to Pakistan and joined Precision Rubber Products(Pvt.) Ltd. as Plant Director. He remained with this company for almost

3 years and was responsible for Production and Manufacturin g Management. With his well-developed skill set, AbrarHasan joined National Foods in 1993 as Plant Director and was appointed by the Board of Directors as Chief Executiveof the company in 2000.

His dedicated approach and inspirational leadership has taken National Foods from a simple recipe producer to afull-edged food company today. He is the driving force behind his team of sk illed professionals and has introducedinnovative technology, human resource development & management and new marketing trends that have made theCompany a respectable name in the industry. Mr. Abrar Hasan was invited to join the Board of Cherat PackagingLimited as an Independent Director in September 2010.

Mr. Abrar HasanCEO

Mr. Waqar Hasan is the Corporate Director of National Foods Limited.He enjoys a high prole stature in the Textile and Food Industries andis a well renowned cricket administrator in Pakistan.

Mr. Hasan established National Foods in 1970 in partnership withMr. Abdul Majeed. During his tenure as the Managing Director at NFL,Mr. Hasan embedded a strong set of fundamentals and ethics into theNFL culture that continues to guide the activities of the rm eventoday. Mr. Hasan’s ambition and dedication resonates in the expansionof NFL from a small-time operation to an organization that now

envisions becoming a Rs. 50 billion company in 2020. He was also very successful in building the National Brand,which has now become an I nternationally recognized and a common household name in Pakistan.

Mr. Hasan has a rich 14 years sports career to his name; he has performed not only as an excellent test cricketer forPakistan since his debut in Lahore in 1948-1949 but has also served in a variety of off-eld administrative capacitiesfor the Pakistan Cricket Board (PCB-formerly BCCP).

Mr. Waqar HasanDirector


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Mr. Rana Azam Mr. Waqar Haider

Mr. Raq ul Islam Mr. Muzammil MustafaMr. Adnan Qazi

Mr. Muhammad Arif

Mr. Shahid Hussain

Mr. Azher Ali

Mr. Adnan Malik

Head of Departments


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Mr. Noman Khan

Mr. Farhan Latif Mr. Kamal Baig

Mr. Muhammad IqbalMs. Saira A. Khan

Mr. Ashraf Ali

Mr. Shakaib Arif

Mr. Fazal Rehman

Head of Departments


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CEO’s Message


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The Year AheadAs the external environment brings variouschallenges our way, we need to convert these intoopportunities and develop crucial internalstrengths to surpass them. We believe thatexpansion in the international market operationswill be benecial not only for our company but theeconomy at large as well. We will pursue all growthoptions in the international market aggressively todeliver our vision and delight our stakeholders infuture. We are resolute on strengthening our hold

on the international markets in the coming year.

The company is strongly committed to growth andwill be investing in new food categories ininternational and domestic markets. Our focus willbe on aggressive investments, hence postconsolidation prots will be deployed in new

projects to secure additional growth for the futurehelping us achieve our vision.

Abrar HasanChief Executive

Karachi: September 04,2014

During the last ve years the turnover of our business has doubled, standing testament to our transformationinto a sustainable growth business, underpinned by an energizing 20/20 vision. During the year under review,National Foods Ltd. grew by 15%, which given our challenging and competitive operating environment is deeplygratifying.

NFL is uninchingly committed to delighting our consumers & customers with a view of creating shareholdervalue. Keeping this objective in mind, our priority durin g the year remained on strengthening our brands, focusingon people and making our operations simple, agile and more responsive to market needs.

Our portfolio contains many brands which a typical Pakistani consumer feels strongly connected to as we havestrived to build on our cultural heritage. Our new National recipe campaign, “Humaray Khanay, Humara Pyaar” isone such example where we have attempted to strengthen the bond between consumers and our company.

We are convinced that the delivery of our 20/20 vision will be determined by the quality of our talent and adynamic organizational structure. During the year, we have embarked on making structural changes in theorganization and have made signicant progress. We have also strengthened our talent pipeline. The workinitiated on agile and exible organization & talent management will continue during 2015.

We are making serious attempts to reach more consumers in both local and international markets. This will onlybe possible if we deliver outstanding operational performance throughout the supply chain - from the harvestingof spices up and until it becomes the favored choice of consumer. We embarked upon exploring the rural marketin an attempt to tap into the potential of the largest segment of the Pakistani Economy - it pleases me to see thatthe early signs are encouraging. We are expanding our operations in overseas market as these white spaces offerhuge business potential for NFL. We have also started the contract manufacturi ng of Ready-to-Consume meals inCanada in order to help make our supply chain even more n imble to market needs.

The dedication and hard work o f our people is a major contributor to NFL’s success. We will continue to invest inour human capital and work to help unleash their full potential by providing an ideal work environment.


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Our Brands


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With over 60% of the population residing in ruralareas, NFL aimed to create a stronghold over itscompetition and counterfeit brands present in therural markets. In order to establish the superiority ofNational’s products amongst the masses, the themeof the activation was called “Asli te Khalis”. Thepurpose of this campaign revolved around National’shigh quality products targeting trial generation bythe rural consumers. It covered more than 140 ruraltowns through BTL activation and cable airing inPunjab and Khyber Pakhtunkhwa.

The Marketing team embarked upon yet another remarkable journey this year exploring new ventures and enrichingexisting initiatives. Signicant effort was undertaken to sustain the strong brand resonance NFL has had with itsconsumers over the past four decades.

NFL’s recipe wedding campaign, “Humaray Khanay Humara Pyaar”infused the bright colors of Pakistan’s festive culture with our lovefor food, creating the perfect recipe for a glorious union. Based onthe traditional Pakistani wedding theme, the 1 minute TVC,captivated the hearts of millions, young and old alike with itsentrancing storyline, enticing food shots, sublime aesthetic senseand catchy tune. This TVC, along with its teasers, was aired on allmajor channels and the campaign was further boosted throughradio, hoardings and social media. Furthermore, this year NFLpioneered 3D advertising in cinemas nationwide. The campaignwas further amplied by our “Buggy Baraat” activation, whichwent all across Karachi and Lahore, enhancing the Eid-ul-Azhafestivities.

National’s Converter Activity was conducted in all major cities of Pakistan including Karachi, Lahore, Islamabad, Faisalabad,Gujranwala, Hyderabad, Sialkot and Multan. This initiative was taken to increase consumer interaction at the trade level. Theactivity not only resulted in increased sales but also served to delight consumers, as they were encouraged to purchase NFLproducts by receiving instant gifts.

Converter Activity

Recipe Wedding Campaign

National Ketchup Zaroori CampaignNational Ketchup being one of the most loved condiments of consumers was promoted with a new campaign called“National Ketchup Zaroori”. This campaign displayed different occasions and moments where National Ketchup is amust-have with all kinds of food. With its catchy jingle and ingenious depiction of the various moments ofconsumption, the campaign was very well received by both the consumers and industry professionals. It was alsoable to successfully bag the PAS Award 2014 for the Best Culinary TVC. National Ketchup’s Top of Mind recall wasfurther bolstered by innovative BTL activation programs, which targeted schools and stores along with interactivesocial media engagement.

Rural Activation

Marketing


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NFL has a wide array of products, ranging from Spices,Desserts and Ketchups to Pickles, increasing theconvenience of the modern homemakers and aretherefore, readily available in their kitchen cabinets. Acaptivating TVC featuring National’s diversecategories, their signicance in preparing meals withlove and sensational food shots garnered positivereviews and reinforced NFL’s stature as a leading foodcompany in Pakistan.

Recipe Princess kicked off with its 3rd season thisyear across seventy Government Colleges forwomen present in ve different cities, with the aimof searching talented young girls who have a airfor cooking to compete for the title of RecipePrincess. These girls were encouraged to showcasetheir culinary talent by preparing scrumptiousmeals using National Recipe mixes. A strong bonddeveloped between National and the young girls,as this activation created waves of excitementamongst the latter, which was visible by theirappreciation of the activity on National’s socialmedia page. High consumer engagement alongwith impeccable execution was the reason behindthe success of Recipe Princess over its competitorson the PAS Awards 2014 for the category of “BestBTL Activation”.

NFL has revolutionized the food industry in Pakistan by devising a creative and innovative solution for its diverseconsumers, where they can learn how to cook various scrumptious meals through 1 minute videos using variousNFL products! The 2nd season of Made Easy, brought 10 new scintillating recipes ranging from Fry Kabab, Pizza, Tawa Chicken to Spaghetti Arrabiata. These videos were featured on our Microsite, nf lmadeeasy.com , FacebookPage and Android Application. This campaign was further amplied through a special TVC an d other digital mediaavenues.

Recipe Princess

National Made Easy

National KitchenCabinet Campaign

After the tremendous success of the 1st season of “National kaPakistan”, Pakistan’s rst ever branded episodic content, the 2ndseason of “National ka Pakistan” continued the legacy ofadventure, fun and most importantly, true depiction of Pakistanifood culture. With Chef Mehboob on board, the 13 episodes of“National ka Pakistan” touched upon several undiscovered andexotic destinations in Pakistan, where delicious food with the helpof National’s products was prepared without the facilities of abasic kitchen. This campaign ran on all major channels and wasthe recipient of the prestigious PAS Awards 2014 in the “Passionfor Pakistan”category.

National ka Pakistan


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To display National’s patriotism for Pakistan, a special three and ahalf minutes anthem titled “National ka Pakistan”was developed. The song was sung by our renowned singer, Sh afqat Amanat Aliand the video exhibited the diverse and beautiful landscape andculture of Pakistan.

National ka Pakistan Song

Fruitily had special in-store activations this summer across sevendifferent cities, where refreshing drinks were an essential toenergize. The consumers were encouraged to purchase a specialdeal in selected outlets, which further boosted sales in thesummer season.

Fruitily in-store activation

This year National Foods was able to bag the PAS Awards 2014 for eachcategory it was nominated for Ketchup Zaroori for Culinary, National kaPakistan in Passion for Pakistan as well as Recipe Princess for BTL. Out ofthe 62 companies that participated, National Foods was the only companythat was nominated for completely diverse categories, highlighting ourversatility and cutting edge 360 degree approach.

PAS Awards


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Trade Marketing Sales

In spite of being a relatively new department, the TradeMarketing function has played a signicant role inproviding a boost to the efforts of our Sales and theMarketing teams. With new products coming into themarket alongwith rising shoppers expectations, thetraders are becoming more demanding andcommercialized. This has made gaining optionalin-store visibility a grave challenge.

Channel-Wise Strategies, Perfect Store Deployment,increased Store Recrui tment and VisibilityEnhancement are few of the factors that will helpretain the focus, for making the shoppers’ experiencemore pleasant and less time consuming. In terms ofmarket execution, dedicated and trainedmerchandising teams have proved to create the mostimpact and therefore, throughout the year, exclusivevisibility drives were conducted for Channel Volume

Support, covering both the International Modern Trade and Wholesale areas.

Another milestone achieved by our team this year wasthe successful execution of the Rural TradeEngagement Plans through scratch card schemes andgift redemptions for bulk deals. Furthermore,Customer Management Model was also implementedin Local Modern Trade through JBP.

Trade Marketing will continue to play a vital role inremaining competitive at the Trade level by constantlytranslating our brand into a message that attracts theshopper towards our products.

By employing the latest technology and maintainingstable relations with our longstanding distributors, ourSales Department ourished this year.

Fiscal year 2014 completed with double digit growthas compared to the last year. Exhibition of resilienceand persistance of efforts by our sales team helped ourcore categories shine in our double seasoned scal

year.

NFL is well on its way of capitalizing different marketsegments by utilizing the best of what the Information Technology and Managemen t Information System hasto offer. Introduction of Computerized Reporting Yieldfor Sales and Trade Automation Landscape (CRYSTAL),a Secondary Sales Software, played an integral part inthe decision making process of Sales by providingeffective coverage, availability, actual demand of thebrands and centralized access to information and data. This system which has also been provided to thedistributors, enabling them to experience orderbooking through their mobile phones.

Partnering with structured distributors has helpedenrich the experience of NFL sales team in productdistribution and market servicing.

Focus on the channel-based approach yielded resultsthis year by achieving performance targets throughGeneral Trade, Wholesale, Retail Markets and alsoInternational Modern Trade.

Moreover, rural sales have also experiencedincremental growth by almost doubling in volume. This is the outcome of market penetration anddevelopment in villages and rural areas of Sindh andPunjab. Our rural specic products have received anoverwhelming response in the market, which furthermotivated the rural sales teams to explore moreopportunities and avenues in this segment.

Finally, the Public Accounts channel was revived thisyear on the basis of higher business volumes from theUtility Stores Corporation showing respectable growthin sales. The Public Accounts team worked with greatzeal and dedication in generating business anddealing with recoveries nation-wide.

The department will continue to work relentlessly inorder to spread its reach to our valued customers byadopting innovative channels. We aim to establish anetwork that caters to every rural and urban area of thecountry.


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Human Resources Finance

Finance at NFL, under the recently rolled out FinanceVision has fully aligned its structure and resources forincreasing its contribution towards achieving NFL’sstrategic priorities whilst at the same time ensuring

that the basic controls embedded in the businessremain best in class.

Our key priority remained sustainable growth,delivering margin accretive projects and driving aprotable portfolio mix. For this purpose, the Financefunction continued to support the growth momentumby partnering with other functions at NFL. Severalcross-functional project teams remained engaged foridentifying different opportunities for improvingbusiness protability during the year. The costrationalization drive, initiated a few years back stillcontinues, helping us in identifying and eliminatingwastes from the system. Accurate and timely provision of nancial and numericinformation, enabling day to day decision-making isthe life blood of any organization; in this context,Finance played a pivotal role in enriching the dataexchange and decision-making process. Acomprehensive framework was developed to track,monitor and consolidate information regarding themarketing activities, which was previously reportedthrough multiple avenues. This provided a holistic

one-stop solution. Trainings were also conducted byour dedicated project teams to ensure that suchmediums are utilized regularly and seamlessly.

Furthermore, the Finance team played a crucial role inthe delivery of process simplication programs, byremoving complexities which has helped us inbecoming more agile and quick in decision-making.Similarly, other projects are also underway to make usmore responsive to the needs of our stakeholders.

NFL has recently become a certied employer fortraining by becoming a member of the Institute ofChartered Accountants in England and Wales (ICAEW). This affil iation presen ted an opportunity of attracti ngand retaining new talent in the future. In line with our aim of being recognized as the bestFinance function in the country, we continue torestructure and develop our resources and businessprocesses.

The Human Resources team has been constantly onthe move with its endeavors, bringing in industry’sbest practices whilst implementing initiatives thatstrategically contribute towards organization’s growth.From its business partnering model to itsorganizational development activities, the HR team atNFL has been accelerating in its role, both internallyand externally.

One of this year’s biggest achievements includedmoving forward with our Building Excellence in Peopleproject, which led to nalization our ve corecompetencies termed as SPICE. An acronym along withthe tagline ‘Ingredients for Success’ was devised by theentire OD team. Each competency in SPICE has beengiven an individual identity and logo, originated fromvarious spices and ingredients.

A ve months comprehensive roll-out plan wasdesigned, where the end of 2013 witnessed the launchof SPICE and its competencies by various subjectmatter specialists.

Another key project for this year has been thealignment of business partnership models with theaim of strengthening the structures within theorganization. Moreover, the HR team went through acomprehensive exercise to review, develop and updatethe existing policies, based on the industry’s bestpractices and benchmarks. These efforts could be seenin the form of the soft launch of the revised HumanResources Manual, half-way through the year.

Furthermore, the HR’s OD team was invited to theAnnual Learning Conference held by the PakistanSociety of Training and Development on the 20th of

May 2014, where NFL was highlighted as the mainevent of the day for being the rst local company tointroduce, implement and practice the concept ofBlended Learning by presenting its project BuildingExcellence in People and SPICE. NFL was also anAssociate Sponsor for one of the top leadershiptrainers in the world, Marshall Goldsmith. This programheld by Terrabiz, addressed the change and leadershipImpact, titled “What Got You Here, Won’t Get You There!”.

Revamping the Performance Appraisal System, wasone of our other major initiatives taken this year. Therst step of this revamping focused on one to onediscussions between the appraiser and appraisee.Rating on values was removed in order to make way forthe competency based appraisals next year. Alongsidethis, appraisals and training needs were made intoseparate roll-outs, through which individual trainingneeds will be based on individual performance. Thestreamlined Performance Appraisal system will paveway for career progression through individualdevelopment and feedback sessions.

Lastly, the HR Team kept its spirits high by conductingvarious engagement activities throughout the year,such as our Annual Hajj Ballot and Prize DistributionCeremony for employees, Annual Lunch, anintra-departmental cook-off at the beach fosteringcross functional interaction, a day out at Arena whichwas full of team building exercises and fun.


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International Division

The International Division collaborates with oursubsidiaries to ensures that the needs of our foreignconsumers are met. For NFL, this year was all about‘Celebrating the Flavours of Pakistan’ across the world.We positioned ourselves as a brand, offering theauthentic avours of Pakistan. The message ‘Nationalka Pakistan’ was communicated through media,outdoor and other promotional campaigns and wasalso aired on the International beams of Pakistanichannels to further strengthen the brand’s association

with Pakistani cuisine.

International Marketing Campaigns This year, the company made its presence prominent inmajor International markets such as North America,Europe and Middle East by launching effectivemarketing campaigns for its core categories includingRecipes and Pickles. NFL advertisements ooded print,indoor, outdoor and media, where Recipe and Pickle TVCs were aired on highest rated Paki stani and Indianchannels. Furthermore, Trade and consumer offerswere also given around the peak buying seasons todrive sales.

International Below-The-Line and Display DriveActivities Throughout the year, th e International Division heldextensive BTL and display drive activities throughdifferent posters, point-of-sale material, productsampling and consumer offers. These activities weremainly conducted in the North American, Australia,United Kingdom and Middle East. The excellentcustomer feedback and response received, furtherendorsed the success of our activities.

NEW LAUNCHES:Frozen Foods: National AuthenticsNFL launched its rst range of Halal frozen meals,‘National Authentics’ in May 2014, catering to thedemand of authentic curry meals in the Canadianmarket. This is a milestone for the company, as it ismoving towards the convenience foods segment usingits expertise of traditional spices and delicious recipemasalas. These authentic mouthwatering meals areprepared from National Recipes and are Halal certiedby Islamic Food & Nutrition Council of Canada(IFANCC). National Authentics meals are available infour tantalizing variants namely, Chicken Biryani,Vegetable Biryani, Butter Chicken and Chicken Quormawith rice. The frozen meals are ready to consumethrough a quick ve minutes heat in the microwave.

Masala Snax This year also saw the launch of NFL’s rst range oftraditional nimco snacks. National Masala Snax is a

range of exotic, explosive and exciting snacks, offering5 tantalizing avors which are Chatpatta Mix, ChilliChips, Karachi Mix, Bareek Sev and Moong Dal, packedin attractive vibrant colors.

Masala Snax has been launched successfully in NorthAmerican, Asian and Middle Eastern markets as a steptowards ‘ready to consume’ products portfolio of thecompany.

Golden Fried OnionsNFL is also expanding its product portfolio in terms ofingredients by launching fried onions for making thecooking experience more convenient for itsinternational consumers. The product has beenlaunched successfully along with the tagline “ExtraCrispy, Fried to Perfection” campaign to communicateto the consumers that it is a premium quality product.

National Rice Re-positioningPure, premium and aromatic basmati rice has been thespecialty of NFL. With the rice category growing by

50% over the last year, National Basmati Rice has beenre-launched in new and improved packaging, offeringthe same great taste. The product is of superior qualitywith its elongated grain length, pure fragrance andne texture. NFL has expanded its rice range with newSKUs, a new variant, National Long Grain Sella Rice anda new rice brand, WAH.

NEW CAMPAIGNS:Ginger Garlic Pastes CampaignA new campaign was launched to highlight the rangeof its Ginger Garlic Pastes with the tagline ‘Adds adelicious touch of pure avour to your food’. Thepackaging of the paste bottles has also been modiedfor making it more user friendly. The pastes not only make the cooking experiencemore delightful but also adds a touch of savoryPakistani avor and essence to the food.

ExhibitionsNFL exhibited itself in major trade and consumer fairsincluding India International Trade Fair, Anuga andGulfoods in India, Germany and United Arab Emiratesrespectively. New categories including NationalAuthentics and Masala Snax were launched at

Gulfoods 2014. Gulfoods also served to be an excellentopportunity for strengthening the Internationalbusiness as well as for meeting potential customers.

Distributor Conference The rst distributor conference was held on 25th February,2014 at the Novotel World Trade Center Hotel, Dubai. Theevent was a huge success, as it was attended bydistributors from across 30 countries. The event was held toannounce the launch of National foods DMCC office andthe new structure of the International Division along withthe achievements of the year and appreciation of the topperforming distributors. It was a great opportunitythrough which the distributors shared the experiences oftheir markets and discussed new ideas.

The Intern ational Di vision will strive to penetrate newhigh potential markets in order to take theorganization forward. The ID team is dedicated tomaking NFL a truly Global Brand.


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Information Technology

As a growing and dynamic business function of NFL, theInformation Technology team continued to collaboratewith other entities at NFL to develop systems andprocesses that meet the needs of our business. Most ofour projects completed during the 2013-2014 aimed atimproving efficiency, process standardization, easyaccess to information, effective decision-making,increased security and accessibility of data and capacityenhancement. Cost Optimization The implementation of Server Visualization served tooptimize costs and deliver better results, providing asecure and reliable platform that enables IT to meet SLAsfor the most resource intensive and business criticalapplications at the lowest Total Cost of Ownership (TCO). Business Continuity Planning To ensure business continuity in the event of a disaster, anoff-site DR Client Site has been setup that can be used ifthe primary or main site becomes inaccessible. Theidentied business users can be relocated to the DR clientsite to perform essential business operations until themain site becomes accessible. The DR Client Site has beenequipped with necessary IT infrastructure and facilities toprovide the required essential support to the businessusers. Furthermore, IT has successfully deployedcloud-based services to introduce multiple benets for

the business at an optimum cost. The key benets includeimproved manageability, less reliance on local resourcesand moving from CAPEX to OPEX model with zero capitalcosts and usage-based pricing model.

Business PartneringIn our pursuit to support the business in customer-centricinitiatives, an Allergen Tracker was created to identify and

control Allergen presence in the entire range of NFL foodproducts. The Allergen Tracker system creates a fullydynamic and comprehensive business intelligencesystem, bringing signicant improvements in thebusiness process. To improve efficiency of the marketingand sales process, E-Trade Marketing System wasdeveloped which tracks all the sales related activitiestaking place nation-wide. This system enables NFL toreceive both high level and in-depth informationregarding sales at the shop level.

Moreover, Mobile Based Applications were alsointroduced for the sales team at NFL. This has signicantlyreduced the lead-time of the delivery cycles to the shops,resulting in making order booking a real-time function.

IT Governance at NFLAt NFL, IT Governance plays an important role, focusingon ensuring adherence to the policies and governancerules by the operational teams and business users. ITGovernance assures that the risks associated with the ITprojects and operations are well covered and mitigated. This is achieved through a well-dened system andguidelines for task initiation and execution. In addition tothis, IT Governance also assures that the projects relatedto information, business processes, applications andinfrastructure are in compliance with its respectivepolicies.

The future of Information Technology, at NFL willcontinue to focus on integrated business processes withthe aim of satisfying the needs of its external as well asinternal customers.

Supply Chain Management

The management of the ow of goods at differentstages of production and dispatch is the responsibilityof the Supply Chain department. This year numerousstrategic initiatives were taken by the Supply Chainteam in order to improve functionality.

The most important initiative taken this year was ofrevamping the Material Requirement Planning (MRP)module in SAP, which encompassed the entire SupplyChain function. This project automated the productionplanning process to a greater degree, learning theplanner more time for analysis and control, ensuringsmooth sharing of information with lean inventories.

Effective planning of MRP however is dependent uponthe quality of its inputs. One key input is the demandforecast, which is driven through our Building Blockstool. This tool provides a basis on which volume frommarketing and trade activities over and above thebaseline is agreed, for each cluster, a group of SKU(s)with similar marketing dynamics. Cluster is thenbroken down into regions and SKU(s) based on their

historical contribution by this tool. To incorporate judgment calls of all key stakeholders whendetermining cluster and ensuring greater accuracy ofthe forecast, two new forums were initiated, namelyCorporate Demand Review (CDR) and RegionalDemand Review (RDR). These forums provide a basis,where the cluster numbers are agreed upon at anational and regional levels based on past trends,current market opportunities and budgeted target. The incorporation of these forums is in line with thebest practices of our industry.

A reliable forecast leads to efficient resource planningand procurement of raw materials and packagingmaterial. The Procurement team has successfullyimplemented the Kraljic model, linking it with SAP. Aglobal sourcing program was also initiated to cater tostrategic and bottleneck materials identied by theKraljic model. New global vendors were developed forthese items through food fairs and country visits,reducing supply risks and optimizing costs.

Furthermore, Supply Chain and in particularProcurement, has been very responsive in dealing withthe ever changing food laws of both the local and

global markets. With the help of the R&D team, issuesregarding various ingredients were resolvedeffectively, substitutes were swiftly identied andprocured where needed.

FY 2014 has been a fruitful year for the Logisticsfunction as well; capacity enhancement, productivityincrement, human capital development and costoptimization, were areas of our key focus. The Sukkurwarehouse was renovated, leading to a 15% increase inthe Goods Warehousing Practices audit score. Storagecapacities were also enhanced at the warehouses inPort Qasim and SITE. Increased capacity will aid us indealing with the seasonal inventory loads moreefficiently. In addition, all stock is now transportedthrough containerized vehicles.

Moreover, the procurement of powered pallet truckshas reduced manual handling and improved laborproductivity. Tools such as Distribution RequirementPlanning (DRP) were developed to reduce repetitivetasks in daily distribution planning, ultimately

increasing the time devoted to reporting andcontrolling outcomes. To allow for better informationdisbursement to all our stakeholders, various newreports were developed throughout the year providingin-depth details regarding space position, pendingorders at warehouse level and close to expiry stock inreal time.

Lastly, collaborative partnerships were developed withour transporters, further simplifying the process ofcontainer awarding along with substantial savings.


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Moreover, NFL also commits to support the health,safety and well-being of the consumers who enjoy ourfood, the individuals who work for us and thecommunities where our offices and manufacturingfacilities are located. As a part of our Health & Nutritionsegment, besides partnering with Aman Ghar, werecently launched an initiative called Saaf PaaniSehatmand Zindagi, which focuses on providing cleandrinking water to our workers.

Aman Ghar: The CSR team works hand in hand with Aman Ghar,contributing in the preparation of 3500 school mealsevery day by donating in kind, on a quarterly basis. Wenot only contribute through provision of nutritiousand hygienic meals to the children at school, but alsomake sure that we accompany them to their homes intimes of vacations and Ramadan through NFL GoodyBags. NFL Goody Bags is a recent initiative, whereby wedistribute a delightful mix of different NFL products tothe children, such as Fruitily, Vermicelli, Custard andJelly. These children belong to different schools in thevicinity of Khuda Ki Basti, Karachi not only enjoy theirsummer vacations with National’s products but alsolook forward to rejoining school.

Saaf Paani Sehatmand Zindagi - Clean Water IsFundamental To Healthy Life:A recent initiative called Saaf Paani SehatmandZindagi, focuses on improving the ‘quality of life’o f ourworkforce and their families, by spreading awarenessregarding the benets of consuming clean drinkingwater to our factory labor, janitorial, catering andsecurity staff at SITE, Port Qasim and Muridke.

Saaf Paani Sehatmand Zindagi not only highlighted onthe importance of drinking clean water to our workersbut also helps them understand why it is essential tospread the message to their loved ones back home, aschanging this mundane habit, can prove to have a verylong lasting impact on their lives.

Along with conducting interactive awareness andhealth screening sessions in collaboration with AmanHealth Services, informative leaets and standees were

also distributed and placed at prominent places in allof our factories.

In order to ensure the sustainability of this initiative,the CSR Team through the platform of Saaf PaaniSehatmand Zindagi provided the workers theopportunity of taking clean drinking water to theirhomes, free of cost.

Lastly, in Community Development, apart frommanaging a water plant in Kunri, we have added 2more water ltration plants that are currently underconstruction near Umer Kot. Our new water ltrationplants will be fully operational from June providingabundant water for the plantations and people ofcommunity, fostering a positive environmental impacton the community in nearby areas.

The sustainability strategy of CSR will continu e to serveas an essential cornerstone for all the initiatives NFLplans to take onboard in the future. Under the TripleBottom-Line Value Creation approach, our focus willremain on creating value added impact on theEconomy, Environment and Society of our country.

NFL as a responsible corporate citizen continues totake great pride in actively contributing to thewell-being of the society and playing its part towardsthe social development of Pakistan. This year the CSR Team has been successfu l in initiating and scal ing upmultiple projects nation-wide under its umbrella, byexploring projects in different avenues and withvarying impacts.

We continue to support Aagahi Adult Literacy Programand Aasmoon Lootfun Primary Girls School as ourprimary focus amongst all the other Education andLiteracy programs including the School of Britannicaand Karachi School of Business Leadershipscholarships.

Aagahi Adult Literacy Program: Through Aagah i Adult Literacy Program, the CS R teamcelebrates almost a decade of collaboration with itspartners, The Citizens Foundation (TCF), LiteratePakistan Foundation (LPF) and Shield Corporation (SC).NFL together with its strategic alliances has positively

impacted the lives of more than 23,300 women across40 cities nation-wide and continues to set the bar highby establishing more centers and liberating womenthrough education.

These women who belong to different age bracketsand backgrounds, cannot overstate the joy ofovercoming the routine obstacles such as, doing‘hisaab’ of their monthly grocery bills or being able toread and understand different signboards. This basiclearning of Urdu and Maths has changed their livesdramatically.

Ceremony:Every year NFL along with its collaborators, TCF, LPFand SC organizes a Certicate Distribution Ceremonyto appreciate the commendable efforts of TCF’sdedicated principals, teachers, area managers andcoordinators for making this program a success yearafter year. This year also, on the successful completionof Aagahi Adult Literacy Program’s 14th phase, NFLhosted a grand Certicate Distribution Ceremony,where Mr. and Mrs. Abdul Majeed, Mrs. Waqar Hasanand Mr. Abrar Hasan graced the occasion as chiefguests from NFL.

Aasmoon Lootfun Primary Girls School:Aasmoon Lootfun Primary Girls School (ALPGS) is acollaborative effort of NFL and its InternationalDistributor. One of the main reasons why the strengthof students in ALPGS is more in number than the otherschools located in Islamia Colony, Kati Pahari Area,Karachi is because even though their primary focus ison providing quality education, they also try todevelop their children intellectually through

organizing different interactive extracurricularactivities and programs. Promoting such a cultureamongst their students, encourages them to progressfearlessly in the society, in both of their personal andprofessional capacities.

Ceremony:ALPGS is held once every year, where children preparedifferent tableaus and speeches for the day. The topperformers of the school are recognized and awardedmedals and certicates by the chief guests in order toappreciate the efforts of the children.


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Corporate Social Responsibility


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Quality, Research & Development

The Quality, Research and Development team workeddiligently to serve its function of enhancing the qualityof our new and existing products. QRD tirelesslyworked to resolve compliance issues of the health andsafety certications in food production. It activelyexecuted different initiatives this year, including bothsmall and large scale projects, focusing on excellenceand quality in terms of cost savings, processre-engineering, legal compliances, productdevelopments, revitalization of quality specicationsand food safety initiatives.

The successful implementation of the AllergenManagement System throughout NFL has been thebiggest achievement of the year. Keeping in mind thebreadth and depth of this change managementprogram, it was divided into different phases based oninternationally proven industry practices. The journeybegan with the Virtual War Phase, wherein systembased controls were established to monitor, track andcontrol Allergens.

The Allergen Management system was derived from anarmy theme, which kept all of the departmentsworking together for achievement of their respectivetargets. The next phase was Operation Clean-up,followed by the Testing Mission Phase, which focusedon bringing Allergen related awareness to the workerson the Production oor, helping them implementcontrols through devising dedicated machines,schedules and cleaning processes. These practices

were tested and validated to conform to theinternational guidelines and were also supported witha supplier control program that controlled and

reduced the occurrence of Allergens from the supplyside. Strict auditing practices nished up the validationin the Final Wash Out Phase bringing us compliantproducts in terms of Allergens.

The Allergen War saw its victory through huge costsavings, improved Goods Manufacturing Processesand new pathways for customer oriented products.Alongside pioneering the local food industry with itsAllergen Management System, NFL has alsosuccessfully developed various advanced testingmechanisms in-house. In line with the new productdevelopments, Masala Snax and Authentics are thelatest additions to the product range and variety thatNFL offers. Masala Snax is composed of ve differentSnack variants developed through third partycontractors, whereas Authentics offers a range of fourdifferent frozen meals that have been developed andlaunched in Canada. Both these products not onlydeliver superior taste and quality to our exportconsumers but also meet its internationalcompliances.

Some Line Extensions were also introduced to increaseour market share, such as Behari Kabab, VegetableBiryani, Mutton Biryani, Butter Chicken in the localrecipe range and Lahori Fish and Pakora Mix for theexport recipe range, Pickle variants were also madeavailable in pouch and bucket SKUs. The QRD teamsworked actively with Government officials and thepeer industries to resolve the issue related to Punjabfood laws on priority and took immediatecounter-measures for product and packaging torecover the loss. Emphasis on the regulatory changesin product denitions has also been increased to meetcompliance gaps.

For the last 10 years, in the era of strict inspections andthorough border controls for product exports, ourproducts were returned from the US Port, in theabsence of substantial evidence. However, now theseexports follow a smooth and hurdle-free process to US,as NFL overcame all the import restrictions on Recipes,

Spices, Jams and Jellies and successfully found its wayout of the Import Alert List of US-FDA.

The revival of Quality Specications continued thisyear to complete the thorough review of the entire NFLrange in compliance with the international standardsalong with compiling, reviewing and updating thedetailed specications in the QM module of SAP ERPsystem. Approximately 1600 quality parameters werecreated to lock the standards and inspection plans of1200 items, becoming one of the biggest achievementin the history of NFL QRD Department.

Supplier Evaluation Program continues to benet us. This Program helps us in selectin g the best partner s towork with through a rating scheme along withdevelopment of the under-rated ones to meetbusiness requirements, guiding us to improve ourfuture supplies of raw and packaging materials. TheQuality team played a vital role in re-commissioning ofthe Water Plant at SITE, by setting up its in-houseextrusion machines. The in-house processes andproducts were tested, veried, adjusted and thenre-validated till the required specication was met. These testing practices were also validated through anexternal prociency testing scheme.

Moreover, efforts were made to re-align our FoodSafety schemes in Pickle, Paste and Muridke plants by athorough gap analysis and recommendation, to

achieve FSMS requirements and FSSC 22000 schemesfor NFL next year. Trainings were provided tocross-functional teams so that they are well-equippedwith the quality requirements to follow. Since foodsafety hazards can occur at any stage, the QRD teamensured that essential and adequate controls are inplace. ISO 9001 is a series of standards that dene,establish and maintain a quality assurance system formanufacturing and service industries.

In short, this year was packed with different shiningprojects undertaken by the QRD department, thesewere dedicated to fullling the growing ambitions ofNFL. A promising future of this department, along withthe others, is testament to the future expected growthof our organization. Increasing competition requiresthat we continue innovating and improving the qualityof our products in order to gain and maintain acompetitive edge.


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Operations

The NFL Operations team plays a ver satile role, strikin ga perfect balance between increased production,timely supply and improved quality at all its majorproduction facilities in SITE, Port Qasim and Muridke.Keeping in mind the nature and magnitude of all theproduction facilities, various cost cutting andefficiency enhance projects were undertakenthroughout the year.

SITE The Paste Plant team was successful in im plementingseveral projects for process improvements andproduction enhancement, ensuring its contributiontowards strategic business growth. The process of the3.25 kg and 100 gm sachet machine was converted toa semi-mechanized system from a purely manual oneleading to increased productivity and efficiency of themachines.

The induction of high speed shearing mixing pump,high pressure washing device and two sided cartontaping machine has helped in streamlining theprocesses, making it more efficient with improvedquality of production.

Furthermore, the productivityof the Salt Plant increasedsignicantly by 29%, leading to

wastage reduction of 6%. Theseefforts were also supportedby organizing informativeawareness sessions for thefactory staff. In line with makingour working environmentbetter and more conducive toimproved production, anIn-house dust collection systemhas also been installed.

In August, NFL acquired anexternal warehouse to meetits demand for materialwarehousing. This warehousehas been converted into a worldclass storage unit, receiving 99%score in Goods ManufacturingProcesses audit.

MuridkeMuridke plant has successfully augmented thecapacity of its Salt Plant by installing a new grindingand sieving line. The production cycle now completesin two shifts, with the plant capacity enhanced to 90MT per day. Previously the production of 57.6 MT wascarried out in three different shifts. This project willhelp in curtailing additional freight cost and saveapproximately 9 million rupees annually. Moreover, the Muridke team has successfully carriedout 70% of the fabrication, civil and electrical tasksin-house, leading to signicant savings during theimplementation of the project.

In line with the Plant’s OHSAScertication, we are also planning toobtain Food Safety Management System

ISO 22000, 2005, certication. In order topursue this aim, we have further invested2.5 million rupees to strengthen theinfrastructure of the plant.

Lastly, the payroll system and attendanceof the employees including the thirdparty workers is now recorded throughswipe card, which is further linked to theHR payroll system, making both thepayroll processing and attendancerecording process more efficient andtransparent.

Port QasimDuring 2013-2014, the Port Qasim teamsuccessfully implemented severalprocess enhancement projects thatcontributed to the growth of business.

These projects ranged from efficientprocessing and cutting of Mangoes,recycling of brine wax and sugar bags toelimination of unnecessary raw materialsand signicant cost savings in oursystem.


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Sustainability Initiatives

Corporate Social ResponsibilityOur efforts have been directed to facilitate theprovision of education in under privileged townsacross Pakistan. We have taken some womenempowerment initiatives so that the Pakistani womenare saved from oppression and realize that they areequally capable of establishing their own identity.

Community Investment and Welfare SchemesPakistan’s resources have not been exploited to thebenet of its economy in the past. Exports of red chilifrom Pakistan were not possible due to the methods ofdrying chili used by unaware farmers. NFL’s researchteam identied the fault and devised a plan to helpcarry out this process in a manner which ensured thatthe chili produced no longer posed a health hazard. Inthis process, National Foods equipped the farmers notonly through trainings but with supplies as well.

Employment of Special PersonsAt NFL we follow a strictly merit based recruitmentprocess. It is ensured that no discrimination takes place

on the basis of gender, age or physical disability. Theinduction criteria are based on the job description andselection on the capability displayed by the candidate.

Occupation Safety and HealthWe take full responsibilty of the health and safety ofour workers on our premises. We follow the guidelinesof OHSAS to provide a safe working environment. Dueto the nature of operations on our production sites are ghting team has been professionally trained fromamongst the workers to deal with any emergencies.Furthermore, we have recently started producingmineral water for consumption at our plant sites. This isdone to ensure that our workforce remains healthy andproductive.

Consumer Protection Measures The NFL team works hard to ensure that the bestquality products and services are offered to all itsconsumers. A recent awareness campaign waslaunched to ensure that consumers could differentiatecounterfeit products from our original ones, to ensurethat our consumers are not misled into usingsubstandard goods.

Rural Development ProgramUrban areas accommodate a considerably smallerproportion of the overall population of Pakistan. Therefore, we have turned our attention towardsdevelopment of rural markets. In the process ofcreating value for the company we hope that the areaswill be exposed to the modern way of life which willhelp make their lifestyles more comfortable.

Energy ConservationEnergy shortages are a frequent deterrent to theefficient functioning of plants at production sites. Ourmotors and pumps are being re-examined to ensurethey are not over/under rated. Moreover, installment ofeconomizers and dual fuel systems are underconsideration. The successful implementation of theseprojects will optimize our energy utilization.

Environment Protection MeasuresWe have taken humble steps to try and reduce theharmful impact of our operations on the environment.Wet scrubber has been installed at the salt plant, which

lters out the salt dust from air before venting it out in tothe environment. All the old asbestos overhead sheetshave been removed in phases by following the properdisposal protocol for safe handling and disposal of thepoisonous and hazardous asbestos. Furthermore, astudy for waste water treatment and disposal is beingconducted by a third party vendor to bring forth all thealternatives available for our use to ensureenvironmental and human safety.

Industrial RelationsOur production processes are labor intensive hencethe output depends on our workers. A committed andsatised workforce is essential for timely and accurateproduction. The industrial relations department is inplace to make sure that our labor force has a platformto raise and resolve their issues.

Directors’ Report


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Directors’ Report

The economic and political landscape of Pakistan testedthe resilience of our organization at various levels. Adeteriorating operating environment characterized bypolitical instability, regulatory pressures and rising energyshortages posed grave challenges. However, despitethese obstacles, our business recorded sales growth of15%, majorly attributed to our star categories includingRecipe, Pickles and Ketchup. For the rst time in ourhistory we surpassed the symbolic threshold ofRs. 1 billion prot before tax for which we would like toplace on record our appreciation for our consumers,customers, employees, shareholders and the society inwhich we operate at large.

Our business strategy is simple and is deeply rooted inthe Founders’ philosophy – we remain committed toimproving the lifestyles of our stakeholders in as manycapacities as can be inuenced by us. The 2014 results arean outcome of this strategy and demonstrate that we aremaking progress towards the delivery of our Vision. Saleswere up by 15% (Local & Export) to Rs. 13 billion withvolume contributing 9% to growth. Gross Margin showed

improvement of 50 basis points, rising to 35.1%. Despitesharp increases in energy costs, essential investment inhuman capital and cost incurred to broaden exportoperation base, we were able to deliver PBT of 11%; givenour operational constraints this is fairly commendable.

Our consumer base overseas is expanding as we furtherpenetrated into the international market throughappointment of new distributors and entering newermarkets. We remain committed to growing our businessin the overseas market and will continue to explore allpossible options. Our strategic investments in costmanagement and production enhancement projectshave reaped encouraging results. Our talent pipeline isstrong and we have made signicant strides in 2014 toensure that we have a purpose driven organizationpowered by the passion of our employees to help deliverour vision. Meticulous management and resilient

foundations promise a larger and more prosperouscompany in the future.

Our commitment to innovation surpassed anyrestrictions to products alone. NFL ran a 3-D commercial,targeting the cinema going audience. Moreover, thePakistan Advertising Society honored us with an awardfor the National Recipe Princess activation. Our marketing

campaigns such as “Humaray Khanay Humara Pyaar”and“National ka Pakistan”Anthem reect our patriotism andpassion for Pakistan. These campaigns and promotionswhen conducted beyond our borders the countryborders serve to pacify the otherwise volatile andterrorizing image of Pakistan while helping to improveour brand recognition and recall.

Notwithstanding socio political and economicchallenges, favourable demographic and consumptionpatterns in the near future are expected to fuel thegrowth of the food industry in Pakistan at a respectablepace. NFL is strategically well placed in the overall sectoras its resources and products are diverse and have thepotential to appeal to all social classes. The Board ispleased with the performance of the business so far, aswe are making good progress towards the realization ofour 20/20 Vision.

KEY CATEGORY REVIEW:

Recipe Mix

Our strongest category grows stronger every year. A 17%growth in sales was recorded, accompanied by anincrement of 1% in the gross prot margin. In order tosustain the performance of this category we continuedour well received campaigns of ‘National ka Pakistan’and‘National Recipe Princess’. The newest campaign‘Humaray Khanay Humara Pyaar’ was a superb successand vastly improved the brand recognition of NFL recipesamong all age groups.

Ketchup The target market of this category is ever growing; overalla 20% growth in sales was recorded. We strive to improveour market share in this category year after year. In orderto ensure that the sales grow consistently,advertisements and trade marketing activities werecarried out at major sales outlets.

SaltNational Salt holds a special position in the productportfolio of NFL. The performance of this essentialingredient never falls short of our expectations. A 17%growth in sales was recorded this year. Keeping in mindits crucial contribution we continue to improve itsproduction process and try to optimize its costs.

PickleSales of pickle were observed to improve. The lengthy andaccurate procedure required for production, rising rawmaterial costs and competitive market conditions posegrave challenges that need to be surpassed in order tomeet targets. Streamlining of several stages of productionhave made the process more efficient but there is stillroom for improvement which we wish to exploit. ExportsFor the timely achievement of our 20/20 Vision it is crucialthat we maintain our focus on the international marketalongside the local market. NFL strives to enhance itsglobal presence through the launch of new productscatering to the requirements of the international markets.A hallmark event this year was the launch of our Halalfrozen meals in Canada. ‘National Authentics’are 5 minutesmicrowaveable curry meals which deliver the true taste ofPakistani food beyond borders with extreme ease. Othervalue additions to our international portfolio includeMasala Snax and Golden Fried Onions. Moreover, basmatirice was re-launched with improved packaging whichensures optimal quality preservation in the product.

Various marketing activities were conducted to boost thesales of our existing products as well. Overall theinternational division made a sizeable contribution of12% to the prot which originated from sales of over1,178 million. This is an improvement from the previousyears. It is this present and potential growth in demandand hence revenue which adds credibility to our claimsthat NFL is capable of becoming a successfulmultinational company.

Our distributors are integral to our success therefore weheld our agship Distributor Conference in Dubai.Distributors from over 30 countries attended theConference. The event was a success where theachievements of our top distributors were celebrated andthey received a platform for discussion of future

opportunities.

Our People The growth of NFL can be attributed largely to the tirelesseffort of its people. An important element of success isthat the people own their organization. We ensure this byaligning the goals of our organization with those of our

workforce. Interactive sessions are held to maintain theirmotivational level and eliminate alienation. Theimportance of smooth communication is recognized andtherefore a casual environment is fostered to facilitate thesmooth ow of information. The management leads aswell as mentors its juniors whereby securing the future ofthe organization in capable hands.

Corporate SustainabilityWe believe it is important to give back to the society inwhich we thrive. Corporate Social Responsibility at NFL isnot an obligation rather we feel privileged to be of serviceto our society.

i) Community InvestmentNFL’s dedication to its social cause can be seen throughthe continuity of its long standing educational programs.New initiatives were also launched to extend the reach ofour philanthropic services. Female empowerment andhealthy lifestyle can be identied as the highlights of ourprogram.

Aagahi Adult Literacy Program The Aagahi Adult Literacy Program is an initiative thatwas launched in 2005 by The Citizens Foundation (TCF). This was launched in order to provide educationalopportunities to mothers and older sisters of TCFstudents as well as other women in the community.

Year after year we strive to improve the lives of womennation-wide. 40 cities have been covered until now andwe hope to keep adding to the number. National Foods &Shield Corporation collaborate with the Literate PakistanFoundation to carry out ALP.

Collaboration with Aman FoundationAmanghar - a program launched by the Aman Foundationprovided a great platform to National Foods to contributein eliminating hunger and providing nourishment tochildren. Under this initiative hygienically prepared meals

are provided to less privileged school children in Khuda kiBasti, Karachi. We hope that through our humblecontributions the children will grow up as physically andmentally healthy individuals.


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Directors’ Report

ii) Philanthropic Initiatives

Saaf Paani Sehatmand Zindagi

Our workers dedicate their life to our purpose and wemake it our responsibility to take care of their health andwell-being. To ensure that our labor and their familiesunderstood the importance of clean drinking water, wenot only equipped them with the essential informationbut also made it possible for them to take water homefree of cost. Then training and information sessions wereconducted in order to make them spread theinformation.

Business Ethics and Anti-Corruption MeasuresNational Foods follows a strict and unwavering code ofethics and conduct. We have recently adopted a newpractice of testing the basic moral and ethicalstandards of our employees in the recruitment process. These standar ds are reinforced time and again in ouremployees through the clearly rolled out guidelinesprovided by the Board.

Contribution to National ExchequerDuring the year, the contribution to nationalexchequer has further increased and the companypaid over Rs. 2,027.13 million (2013: Rs. 1,851.20million) to the government and its various agencies onaccount of different government levies, includingcustom duty, sales tax and income tax. Moreover,foreign exchange of Rs. 1,136 million (2013: Rs. 966million) was also generated through export ofproducts, further reecting our participation in thenational economy.

Compliance with Code of Corporate Governance The managerial objective of National Foods is goodcorporate governance and compliance with bestpractices. As required under the listing rules the Codeof Corporate Governance (Code) issued by Securities &

Exchange Commission of Pakistan, the company hasadopted the Code in letter and spirit as follows.

• The nancial statements, present fairly the state ofaffairs of the Company, the results of itsoperations, cash ows and changes in equity.

• Proper books of account of the Company havebeen maintained.

• Appropriate accounting policies as stated in thenotes to the nancial statements have beenconsistently applied in preparation of nancialstatements and accounting estimates are basedon reasonable and prudent judgment.

• International Financial Reporting standards havebeen followed in preparation of nancialstatements and any departure there from hasbeen adequately disclosed.

• The system of internal control is sound in designand has been effectively implemented andmonitored. The Board has constituted an AuditCommittee consisting of ve members, includingChairman of the Committee. The Chairman ofAudit Committee is an independent director and

the Committee regularly meets as perrequirements of the Code.

• There has been no material departure from thebest practices of corporate governance, asdetailed in the listing regulations.

• There are no signi cant doubts upon thecompany’s ability to continue as a going concern.

• The outstanding duties, statutory charges andtaxes, if any, have been duly disclosed in thenancial statements.

• A statement regarding key nancial data for thelast six years is annexed to this report.

• The value of investments of Provident Fund basedon unaudited accounts was Rs. 203 million.

• During the last business year ve meetings of theBoard of Directors were held. Attendance by eachDirector was as follows:

PATTERN OF SHAREHOLDING

The pattern of sha reholding of the company is annexed to the report.

Sale and purchase of shares by Directors during the year:

Name Number of shares Date of sale

Mr. Khawaja Munir 17,412 15 January 2014Mashooqullah

Mr. Iqbal Alimohamed 3,485,000 5 December 2013

INTERNAL AUDITORS

On the recommendation of the Audit Committee, the Board of Directors in its meeting held on 4th September hasreappointed Messrs. Ernst & Young Ford Rhodes Sidat Hyder & Co., Chartered Accountants; as internal auditors ofthe Company.

EXTERNAL AUDITORS

The p resent au ditors Messrs. A. F. Ferguson & Co., C hartered Accountants are retir ing and being eligible, offerthemselves for re-appointment. The Board of Directors, on the recommendation of the Audit Committee, proposesthe appointment of Messrs. A. F. Ferguson & Co., Chartered Accountants as the auditor until the next Annual

General Meeting.

Mr. Abdul Majeed 5 -

Mr. Abrar Hasan 5 -

Mr. Waqar Hasan 2 3

Mr. Zahid Majeed 5 -

Mr. Ebrahim Qassim 4 1

Mr. Khawaja Munir Mashooqullah 5 -

Mr. Iqbal Alimohamed 1 2

Name of Director No. of meetings attended Leaves granted


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kutta equation

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