As far as I can see, parent is not much interested in India due to relatively smaller size of it’s operation in India. To give an example, Maruti and Suzuki had a difficult relationship in past decade. Suzuki was very stingy and was not willing to invest and innovate for making progress in India. But that changed when we became their No 2 market, and now the largest market for Suzuki. I expect similar pattern for Nestle. Right now we have seen them abuse capital allocation by taking unwanted loans and not doing the right capital allocation. That will eventually change. We have seen that in Whirpool where money is parked for very low returns in parent company debt which is risky. The managers in India are very weak but that will change when India becomes a bread winner for the parent. When that happens, we will see what Maruti did from 2013 replicate in Nestle. We have already seen Nestle pulling their socks after Maggi issue. Indian operation is under the scanner and that clearly shows in their focus to launch more products and increase sales (at the expense of margin as per management).
6 Likes