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Read more from our special coverage on "NESTLE MAGGI CONTROVERSY"
In a statement on Friday, Nestlé India told stock exchanges Narayanan would replace Benet effective August 1.
Nestlé has brought an Indian to head its operations in the country after 17 years. In the 1990s, Darius Ardeshir was the company’s India MD. He quit in April 1998, following allegations of insider trading. Ardeshir was replaced by Rajendra Singh, the company’s executive director (operations). In July 1998, Singh was replaced by expat Carlo Donati, a trend that lasted till the appointment of Narayanan on Friday.
An alumnus of the Delhi School of Economics, Narayanan is a veteran in the Nestlé Group. He had joined the Indian subsidiary of the world’s largest food company in 1999 and was responsible for sales and marketing in India, before being appointed regional sales and marketing head in 2003, in charge of multiple Asian markets. He took over as MD of Nestlé Singapore in 2008 and moved to Nestlé Egypt as chairman & CEO in 2010. In April this year, he took charge as chairman and CEO of Nestlé Philippines.
Prior to Nestlé, he had worked with Hindustan Lever and Colgate-Palmolive.
Analysts say the move to bring Narayanan to India shows the company’s global management is counting on him to bring the company back on track here after the Maggi ban. “It is a step in the right direction. MNC majors such as HUL, USL and P&G have Indian CEOs running the business. In our view, in a large and diverse country such as India, having an Indian as CEO is critical,” said Abneesh Roy, associate director (research), institutional equities, Edelweiss.
Recently, Nestlé India counsel Iqbal Chagla had told the Bombay High Court that the ban on Maggi had a crippling effect on the company, wiping off not only goodwill but also turnover. Maggi noodles account for 25-26 per cent of Nestlé India’s Rs 9,800-crore annual turnover. Following the ban of the noodles, the company withdrew about 25,000 tonnes of the 30,000 tonnes of Maggi stocks from the market in the past two months. This stock was then sent to 11 cement plants for incineration, with the company paying Ambuja Cement Rs 20 crore for this. Overall, the company pegged the loss on account of the recall at Rs 320 crore. Analysts say it might take a while for the company to bounce back in a market that was Maggi’s largest in the world.
Nestlé India has, however, been silently working on a possible relaunch, on hope that Bombay High Court would give the company a favourable verdict. In a recent mail, outgoing MD Benet had said the management was determined to resolve the Maggi crisis in the best possible way, adding it was keen to return Maggi to its rightful position as India’s most trusted food brand. For this, Nestlé has created a dedicated page and also tied up with website surveymonkey.com , seeking suggestions and feedback from employees on how Maggi can be “rebuilt”. Privately, managers at Nestlé India admitted to their colleagues and subordinates that the Maggi issue could have been handled better, with some even saying the crisis could have been averted had engagement with government authorities and regulators been better.
In his arguments in the court on Thursday, Maharashtra Advocate General Anil Singh, arguing for FSSAI, said Nestlé had failed to respond to its show-cause notice, opting to move court instead. He added had the company responded to the notice on time and attempted to satisfy the regulator’s queries on why it should be granted product approval, there wouldn’t have been a ban on the noodles. It is expected arguments in the case will continue through the next few days.
