Maggi effect: Nestle India Q3 net plunges 60%
Net sales during the period declined 32.1% to `1,736.2 cr against `2,557.8 cr in year-ago period
Net sales during the period under review declined 32.1 per cent to Rs 1,736.2 crore as against Rs 2,557.8 crore in the same period last year.
Hit by the Maggi ban, Nestle India reported a 60.1 per cent decline in standalone profit at Rs 124.2 crore for the third quarter ended September 30. The company had posted a standalone net profit of Rs 311.3 crore in the same period last fiscal.
Net sales during the period under review declined 32.1 per cent to Rs 1,736.2 crore as against Rs 2,557.8 crore in the same period last year.
The results, however, are better than the year-on-year loss registered by the company in the previous quarter ended June 2015. Struck by exceptional item charge of Rs 451.6 crore on account of withdrawal of stocks of Maggi noodles, Nestle India had posted its first quarterly loss in atleast 17 years as the company announced a net loss of Rs 64.4 crore for the quarter ended June 2015.
Since, Maggi noodles account for close to 20 per cent of Nestle India revenue, the ban on sales of Maggi impacted the same. However, the company is now getting ready for a comeback for Maggi noodle. “During the quarter, the Hon’ble Bombay High Court set aside the ban on Maggi Noodles and ordered that the earlier batches be tested at three accredited laboratories specified by them. The results received from these laboratories show that 100 per cent samples tested are clear with lead well below the permissible limits. We have commenced manufacturing and after clearance of the samples to be tested by the three accredited laboratories, are keen to reintroduce your Maggi Noodles at the earliest,” said Suresh Narayanan, CMD Nestle India.
The company was forced to withdraw Maggi from market and stop production in June following tests by certain labs allegedly finding lead and MSG beyond permissible limits.
The company has, however, now resumed production of Maggi noodles and sources close to the development told that the company is looking for a Diwali comeback for Maggi noodle. Shares of the company closed at Rs 6,282.10 on BSE, down 0.69 per cent over Wednesday’s closing.
Earlier, in June, this year, the central food safety regulator FSSAI banned the sale of Maggi noodles saying it was “unsafe and hazardous” for human consumption after finding lead beyond permissible limit and presence of taste enhancer monosodium glutamate (MSG).
It is also important to note that the Prepared Dishes and Cooking Aids segment (that mostly comprise Maggi) that contributes close to 30 per cent of the revenue for Nestle India has been the only volume driver for the company.
For the year ended December 2014, while the gross sales quantity (in metric tonne) for the food major—Nestle—in India contracted 0.6 per cent over that in 2013, the PDCA segment saw the sales quantity rise 3.7 per cent. The milk products and nutrition segment which is the largest segment for Nestle India as it accounts for almost 45 per cent of the gross sales revenue of the company saw it contract by 2.3 per cent in 2014 and fell to 135,591 MT.
The milk product and nutrition segment also witnessed a contraction in volumes in 2013 over the year 2012. The volume within this segment has been on a decline over several years now and has now come down to 135,591 MT from 144,397 MT in 2010.
Results better than last quarter
Struck by exceptional item charge of Rs 451.6 crore on account of withdrawal of Maggi stocks, Nestle India had announced a net loss of Rs 64.4 crore for the quarter ended June 2015
The company has, however, now resumed Maggi production and sources close to the development said that the company is looking for a Diwali comeback for Maggi
Shares of the company closed at Rs 6,282.10 on BSE, down 0.69 per cent over Wednesday’s closing
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