Nestle India slips as Maggi worth Rs 320 crore being destroyed

Nestle India fell 2.12% to Rs 5,822.70 at 9:29 IST on BSE after the company said it is in the process of withdrawing MAGGI Noodles stock from the market and destroying it.

The announcement was made after market hours yesterday, 15 June 2015.

Meanwhile, the BSE Sensex was down 100.81 points, or 0.38%, to 26,485.74.

On BSE, so far 2,504 shares were traded in the counter, compared with an average volume of 11,163 shares in the past one quarter.

The stock hit a high of Rs 5,900 and a low of Rs 5,808 so far during the day. The stock hit a record high of Rs 7,499.95 on 10 March 2015. The stock hit a 52-week low of Rs 4,845 on 10 July 2014.

The stock had underperformed the market over the past one month till 15 June 2015, sliding 15.17% compared with 2.70% fall in the Sensex. The scrip had also underperformed the market in past one quarter, falling 18.37% as against Sensex's 6.72% fall.

The large-cap company has an equity capital of Rs 96.42 crore. Face value per share is Rs 10.

Nestle India said the estimated sales value of the stock in the market, including those with the company's trade partners is around Rs 210 crore. In addition, there were MAGGI Noodles and related materials lying at factories and distribution centres when the withdrawal was announced and the estimated value of these is around Rs 110 crore.

These are broad estimates because it is impossible to calculate the final figure while the withdrawal is taking place, Nestle India said. There will be additional costs to take into account, for example bringing stock from the market, transporting the stock to the destruction points, destruction cost etc, the company said. The final figure will have to be confirmed at a later date, Nestle India said. These costs and other unforeseen costs associated with the withdrawal of MAGGI Noodles stock from the market will be dealt with in line with the applicable accounting standards at the time of announcing the financial results on the due dates, Nestle India said.

On 5 June 2015, the Food Safety and Standards Authority of India (FSSAI) directed Nestle India to withdraw and recall all the nine approved variants of its MAGGI Instant Noodles from the market, having been found unsafe and hazardous for human consumption.

The Bombay High Court (Court) on Friday, 12 June 2015, refused to stay orders of the central food safety regulator and Maharashtra government banning nine variants of Nestle India's Maggi noodles.

The Court heard the petition filed by Nestle India raising issues of interpretation of the Food Safety and Standards Act and the orders passed by the commissioner of Food Safety, Maharashtra and the FSSAI.

At the hearing, Nestle India said it has reiterated its press release of 5 June 2015 and confirmed that it is continuing to remove Maggi noodles from the shelf and that the progress reports are being made to the FSSAI. The Court has also directed the FSSAI not to take any action in respect of the notice which required the company to explain itself within 15 days over the product approval already granted for Maggi noodles, till the next date of hearing, Nestle India said.

The Court has asked the Commissioner of Food Safety, Maharashtra and the FSSAI to file their reply affidavits. The court has fixed the hearing for 30 June 2015.

Nestle India's net profit rose 23.6% to Rs 320.28 crore on 8.4% growth in net sales to Rs 2506.79 crore in Q1 March 2015 over Q1 March 2014.

Nestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle is the world's leading Nutrition, Health and Wellness company.

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