Maggi ban pulls down Nestle India's Q3 earnings

Nestle India in its Q3 financial reports showed its shares plunged 60 percent following the ban on its product Maggi.

On Thursday, Nestle revealed that their sales depreciated by nearly 153 million rupees (AU$ 3.284 million) during the quarter as a result of the withdrawal of Maggi.

As the company struggles to cope with the large-scale ban on Maggi, net sales fell to 17.36 billion rupees (AU$0.373 billion), which accounts for a 32 percent plunge in its net sales. Domestic sales in the Q3 earning also fell about 33.8 percent and export sales plummeted by 6.4 percent

Nestle India posted that it could acquire a profit of 1.24 billion rupees (AU$ 0.027 billion) as compared to 3.11 billion rupees (AU$ 0.07 billion) in 2014 over the same period.

“The company had to bear an exceptional item of Rs 24.5 crore due to estimates of loss on accounts of stocks withdrawn including incidental costs thereto and other related costs incurred exclusively in the ordinary course of company business,” a company statement said according to Money Control (CNBC).

The ban came after Indian food regulators found excessive levels of lead in Maggi instant noodles. Although the Indian unit of the Nestle SA, which is the largest packaged food company globally, claimed the product to be safe, it kept Maggi off the Indian market shelves.

Around 66 million Swiss francs (AU$ 94.05 million) worth of Maggi was ordered to be recalled, according to Reuters. Meanwhile, earlier this month, Nestle announced that Bombay High Court has declared Maggi as safe for consumption after testing the product at three labs mandated by the court covering 90 samples.

“We have commenced manufacturing and after clearance of the samples to be tested by the three accredited laboratories, are keen to reintroduce your Maggi at the earliest,” said Suresh Narayanan, Chairman and Managing Director of Nestle India, according to CNBC.

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