Impact of External Factors on National Food Limited.

National food limited is leading food Production Company in Pakistan which export its
authentic flavor to over 40 countries in 5 continent. As a leading food export company National
Food Limited face many external challenges during past years which impact the company in a
positive and negative way.
We have overcome diverse challenges and invested in local economic, social events,
environmental projects and eco-friendly approach towards sustainability and technological
advancements while maintaining a customer-centric approach.

Economic Factors:
Pakistan faced challenges such as import restrictions, currency devaluation, and soaring local
inflation during FY 23. The economic challenges in Pakistan also included supply chain
disruptions and increases in local freight costs. These factors added further complexity to
procurement operations, affecting supply continuity and increasing logistical expenses.

 Currency Devaluation:
Foreign exchange risk due to the existence of receivables and payables in foreign
currency. This means that the company's financial performance is influenced by
fluctuations in exchange rates. Company has net financial assets and liabilities
denominated in foreign currency amounting to Rs. 1.87 billion as of June 30, 2023,
compared to Rs. -1.09 million in 2022. It implies a substantial increase in exposure to
foreign currency risk.
National food responded to currency devaluation by implementing smart sourcing
strategies. This likely involved seeking cost-effective options both domestically and
internationally to mitigate the impact of rising prices.

 Inflation:
National Foods responded well to economic conditions, characterized by high inflation
rate in country. The Nooriabad Plant has performed exceptionally well in managing
manufacturing overhead costs, staying within budget. Inflationary pressures brought on
by unusual fuel price increases and floods that risked our service levels and business
continuity were the year's biggest challenges.
Introduced Sachet pack to customers due to high inflation and high pricing, sachet
campaign was successfully introduced to customer through various digital channels.

 Maintaining Forward Covers:

To hedge against currency fluctuations, National Foods likely utilized forward contracts
to lock in exchange rates for future transactions, thereby reducing the risk of currency
devaluation impacting procurement costs.

 Supply Chain Disruptions and Freight Increases:

Economic condition also impacts on supply chain distribution, and with local freight
increase, the team insure stakeholders are updated with market updates, company use
smart sourcing, maintaining forward covers, material substitution and change of supply
channels and collaboration with best in-class local vendor to insure their operation is
facilitated.
 Change of Supply Channels:

To mitigate the impact of increased local freight costs, National Foods may have
explored alternative supply channels, such as optimizing transportation routes or
shifting to more cost-effective modes of freight to maintain competitiveness .

 Developing Alternate Sources: National Foods responded to supply chain

disruptions by developing alternate sourcing channels. This proactive approach likely
involved identifying and qualifying additional suppliers to ensure a reliable supply of
materials despite disruptions.

Social and Cultural Factor:

 School Meal Program and Education Access:

National Foods collaborates with Allah Walay Trust for the 'School Khana Program' to
combat classroom hunger and promote education access.
Addressing malnutrition and promoting education indirectly contributes to
environmental sustainability by fostering human capital development, which is crucial for
implementing effective environmental conservation measures in the long term.

 Partnership for Children's Well-being:

National Foods partners with Child Life Foundation Pakistan for initiatives supporting
children's healthcare and well-being.
A positive impact by supporting children's health and well-being, National Foods
contributes to building a healthier and more resilient population, which indirectly benefits
the environment by reducing healthcare-related environmental burdens .

 Sustainable Practices Integration:

National Foods integrates sustainable practices into its operations through the
implementation of its sustainability vertical, which encompasses social, and economic
sustainability principles.
 By incorporating sustainability principles, National Foods fosters a culture of environmental
stewardship within its organization, leading to more environmentally conscious practices and
reduced environmental impact.

 Customer’s understanding:
We continuously seek to understand and identify customer needs so that we earn their trust
and make strong bond with our customers. We focus on providing convenience and value to
our customers.

 Karachi Transformation Plan:

To Engaging with community, National Foods for the first time introduced the Karachi Khaas
Range - a dedicated portfolio consisting of the core range to cater to the unique taste pallet of
Karchites.

Technological Factors:

 Automation and Advanced Systems Implementation:

National Foods has implemented state-of-the-art technologies such as carton printing
and check weighed systems, leakage testers, and HVAC systems.
Positive Impact: Increased Efficiency: Automation streamlines processes, leading to
higher productivity and reduced operational costs.

 Quality Assurance:
Advanced systems ensure product quality, reducing the risk of complaints and pilferage.
Negative impact of the implementation of advanced systems requires significant capital
investment, which could strain financial resources in the short term.

 Compliance with Standards:

Implementation of modern technologies aligns with international standards, enhancing
competitiveness in global markets. Automation may lead to job losses for manual
laborers, potentially contributing to unemployment if not managed properly.

 Adoption of ITS Solutions:

 National Foods is adopting IT solutions for business process optimization. Enhanced
Efficiency and SAP integration streamlines workflows, leading to improved operational
efficiency and decision-making.

 Global Competitiveness:
Adoption of cutting-edge IT solutions enhances competitiveness in the international
market, attracting foreign investment and boosting exports.

 Skill Development:
The adoption of SAP and other IT solutions promotes skill development in the
workforce, aligning with global technological trends.

 Technological Divide:
The digital divide may widen as companies with limited resources struggle to adopt
advanced technologies, exacerbating inequalities within the economy.

 Resistance to Change:
Resistance from employees to adopt new technologies could hinder the successful
implementation of SAP and IT solutions, impacting productivity and effectiveness.

 Cybersecurity Measures:

National Foods has deployed advanced cybersecurity measures, including Email

Security Gateway and XDR technology.

Over all Positive Impact:

1. Data Protection: Robust cybersecurity measures safeguard sensitive data,
protecting against cyber threats and potential breaches.
2. Trust and Reputation: Strengthened cybersecurity enhances trust among
customers and stakeholders, bolstering the reputation of Pakistani businesses.
3. Regulatory Compliance: Compliance with cybersecurity standards and
regulations fosters a secure business environment, attracting foreign investment
and promoting economic growth.

Negative Impact:
 1. Economic Losses: Cybersecurity breaches can result in financial losses for
companies and individuals, impacting the overall economy through decreased
consumer confidence and investment.
2. Technological Dependency: Reliance on advanced cybersecurity measures may
create a dependency on external technologies, exposing vulnerabilities to
emerging cyber threats.

Legal Factor:

 Exceeding Legal Requirements

The Company strives to operate transparently, consistently, and timely

comply with all prevailing laws and regulations of Pakistan. We take
pride in proactively complying with many additional legal requirements
which were not mandatory.

 Intellectual Property Protection:

The Company effectively ensures the safety of its records which are retained as required
to meet legal, administrative, operational and other requirements of the Company. The
company expects employees not to disclose the confidential and commercially sensitive
information except to the authoritative employee requiring it.

 Whistle bowling policy:

The Company is committed to conducting the business with honesty and integrity. All
members of staff are expected to maintain high standards in accordance with applicable
laws, regulations and the Company Code of Conduct and are encouraged to promptly
raise concerns of possible misconduct, potential conflicts, or known breaches with the
Company’s Code of Conduct, and other company policies and procedures.

Political Factor:
 Trade policies:
Government trade policies and trade agreements may impact National food’s
international import and export cost, market access, competitiveness, duties. It may
have an impact on a company’s market share and profitability.

 Political risk:
Effective risk management is crucial to protecting the business reputation and long term
viability.

 Trade Agreements:
Participation in trade agreements and alliances can open up new market for national
food facilitation expansion and revenue growth. Trade Agreements may impact National
food’s international import and export cost, market access and competitiveness.

 Regulations and Compliance.

By adhering to environmental regulations and obtaining certifications, National Foods
contributes to environmental protection by ensuring compliance with standards and
regulations designed to minimize environmental harm.