After a particularly hard quarter in India where it became the centre of the country’s worst food scare in a decade, Nestle has reported a loss in its India business for the second quarter of the year. Suresh Narayanan, the new head of Nestlé India, said the company is “making all efforts and will continue to engage with authorities to bring Maggi noodles back on the shelves”.
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Nestle’s sales declined over 19 per cent to Rs 1,957 crore as against Rs 2,432 crore year-on-year as the company had to reverse revenues of Rs 288 crore due to withdrawal of its popular Maggi noodles from the market.
It is official. The controversies surrounding Maggi noodles and its eventual recall have had a debilitating impact on Nestle India.
Shares of Nestle India dropped during opening trade on the Bombay Stock Exchange’s (BSE) Sensex as the company reported its first quarterly loss in 15 years on the back of a ban on Maggi noodles by FSSAI. It has reduced 2015 earnings estimates by 40 percent to account for exceptional costs related to the stock take-back of Maggi noodles in CY15.
The company said for the quarter ended June its Indian unit made a net loss of INR644m (US$10m), compared with a INR2.88bn profit a year earlier.
Challenging market conditions and volatility in commodity prices pulled down the consolidated net profit of mining major Vedanta by 35 per cent to Rs 866 crore in the first quarter of 2015-16.
Both FSSAI and FDA have claimed that that they had issued notices to Nestle India protecting in thoughts the well being hazards the product might have had because of the excessive lead content material. Consumer trust is and will always remain the cornerstone of Nestle.
To one other query by the division bench of justices S M Kanade and O G Colabawalla, Khambata stated FDA had examined exclusively two variants of Maggi, however banned all of the 9 variants obtainable out there.
The company says that its net sales have been impacted by 20.1 per cent on account of Maggi Noodles.
In addition to loss of sales from the business disruption, net sales worth Rs 288.4 crore have been reversed during the quarter in relation to Maggi noodle stocks already sold and withdrawn from the market, the firm said.
For the year ended December 2014, while the gross sales quantity (in metric tonne) for Nestle in India contracted 0.6 per cent over that in 2013, the PDCA segment witnessed sales quantity rise 3.7 per cent.
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The company’s board today appointed Suresh Narayanan as the managing director with effect from August.
