Nestle India reports Q2 loss as noodle scare hits sales

MUMBAI, July 29 Nestle India Ltd, battling a reputational crisis after a food scare, slipped into a loss in the June quarter, as sales plunged after its hugely popular Maggi noodles were pulled off shelves over safety concerns.

Nestle India reported an exceptional item of Rs 451.66 crore, which “relates to estimates of loss on account of stocks withdrawn including incidental costs thereto and other related costs incurred”.

Nestle India MD said the quarter has been extremely challenging and is keen to reassure consumers that company products are safe.

In the first half of the fiscal, Nestle’s net profit on standalone basis was down 53.22 per cent to Rs 255.88 crore as against Rs 547.02 crore in the year-ago period. “Net domestic sales decreased by 20.6 per cent”, Nestle India said.

The Food and Drugs Administration of Maharashtra today told the Bombay High Court that Maggi noodles manufacturer Nestle India violated laws with the lead level in the popular instant snack being above the permissible limit.

If the company suspected that the FDA reports were not correct then it could have made a grievance before the food regulator to send the samples to an accredited lab in Pune or Nagpur, instead of rushing to the high court to challenge the ban imposed on production and sale of the product, he argued.

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. “Nestle India is making all efforts and will continue to engage with authorities to bring Maggi Noodles back on the shelves”. The company says net sales Worth Rs 288.4 crore was reversed in Q1 due to withdrawal of Maggi noodles from market.

Etienne Benet stepped down as the company’s managing director last week, following the ban on Maggi noodles, which it said was “unsafe and hazardous for human consumption”.

The courtroom was listening to a petition filed by Nestle towards FSSAI’s June 5 order banning 9 variants of Maggi, and Maharashtra authorities’s order prohibiting their sale.