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Shares of Nestle India ended the day almost two per cent lower after the government filed a class action suit against the company seeking over Rs 640 crore in damages for alleged unfair trade practices, false labelling and misleading advertisements.
After falling 4.7 per cent to Rs 6,008.20 in intra-day trade, shares of the company finally ended at Rs 6,184.70, down 1.91 per cent on the BSE.
On the NSE, the stock settled at Rs 6,234.30, reflecting a loss of 1.31 per cent. The company's market valuation fell by Rs 1,157.77 crore to Rs 59,630.23 crore. Tuesday, the Consumer Affairs Ministry had flied a case before the consumer forum NCDRC seeking Rs 284.45 crore in basic damages and another Rs 355.50 crore in punitive damages totalling Rs 639.95 crore from the Swiss giant.
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Earlier, Nestle had to withdraw its instant noodles brand Maggi from the market over allegations of high lead content and presence of MSG (monosodium glutamate).
The company on its part said in a regulatory filing it was yet to receive an official notice about the complaint filed before the NCDRC.
Meanwhile, the damage claim from first of its kind class action suit against Nestle India is likely to go beyond Rs 640 crore as the government is "tabulating further damages" for selling "defective and hazardous" Maggi noodles.
Nestle India is also liable to pay interest at a rate of 18 per cent per annum until the date of actual payment.
